Following Chamley, Lucas, Laitner, and Aiyagari, this dissertation continues to explore the answer for the question of zero capital taxation by discussing how taxes on capital income, labor income, and property affect the economy in the context of a vintage capital model where the embodied technology grows exogenously. The government maximizes social welfare by finding the optimal combinations of the three tax rates in the steady state and examines the welfare gain/loss over and after the transitions caused by different types of shocks. The simulation method used here is linear approximation. My results show that in the steady-state economy, given a fixed level of gov- ernment expenditure and a zero property tax rate, the capital-income tax rate that maximizes steady-state utility may be negative, zero, or positive depending on the level of government expenditure. I also find that, for many values of government spending, the highest level of steady-state utility occurs with a subsidy to capital income and a tax on labor income. Finally, I find that when taxes on capital income, labor income, and property are available, capital-income taxes are generally the last resort to finance government expenditures. My results show that in the transitional economy, when tax rates are perma- nently changed and the government expenditure is near zero, the loss of utility over the transition from no taxes to capital subsidies is too large so the idea itself is not utility-enhancing. Secondly, I find that when the government expenditure is low and a positive technology shock occurs, social welfare in the economy without capital-income taxes may perform better in the early phase of the transition but worse in the later phase of the transition than that in the economy without property taxes. How- ever, the situation becomes the opposite as government expenditures increase. In addition, when one tax is allowed to change, a changing labor-income tax may bring more utility over the transition than the other two taxes. Finally, when the govern- ment expenditure is unexpectedly reduced, I find that using property taxes rather than capital-income taxes stimulates consumption and employment more given a higher initial level of government expenditure.

In this thesis, we will relax two major assumptions in economic growth theory. First of all, we will study growth models with eterogeneous capital goods, the so called vintage capital models: technological advances are not incorporated in all generations of capital goods and there is an optimal age distribution of the capital stocks. We will devote the three first chapters of this thesis to this class of models. Several lessons on technology diffusion will be extracted, notably in connection with the nowadays hot debate on energy saving, technology progress, growth and environmental policy. Secondly, we will introduce explicitly the geographical dimension to the neoclassical growth models, which allow us to build a new class of models. We call them geographic growth models. In this framework, we will identify the consequences of capital mobility across space. In particular, we will examine the optimal stationary distribution of capital across space. Under this framework, we could (i) study the continuous space structure, and (ii) allow capital accumulation.

This thesis is a contribution to the analysis of the relationship between the economic growth and the usage of non-renewable energy resources. More precisely, it is studied the conditions under which energy-saving technologies can sustain long-run growth, even if energy is mainly produced by means of non-renewable energy resources, such as fossil fuels. A general equilibrium framework is considered, giving special attention to the dynamical properties of the economy. In accordance with the well-known debate of complementarity vs. substitutability between physical capital and energy as production inputs, this thesis is divided into two parts. The first part of this thesis assumes complementarity between physical capital and energy as production inputs, which captures the idea of the existence of a minimum energy requirement to use a machine. Even if in contrast with the standard literature on non-renewable energy resources, which assumes substitutability, the assumption of complementarity is indeed supported by various empirical studies. This relationship of complementarity allows one to introduce the assumption of different generations of machines coexisting in each period by adding a new variable to the firm's problem: physical capital replacement. In this first part of the thesis, it is provided a theoretical study of physical capital replacement, i.e., vintage effect, which is an important environmental policy when new machines are assumed to be more energy-saving. Following the standard literature on non-renewable energy resources, this second part of the thesis assumes substitutability between capital and energy. This branch of the literature gives central position to physical capital accumulation to offset the constraint on production possibilities due to use of non-renewable energy resources. This literature assumes the same technology for both physical capital accumulation and consumption, which implies (among other things) that the energy intensity of both sectors is the same. However, data do not support this implication and suggest that physical capital accumulation is relatively more energy-intensive than consumption. Following that, this second part of the thesis studies the implications of this hypothesis.