This paper discusses the impact of externalities on economic growth and the long term distribution of economic activities in a system of two regions. We use a standard neoclassical growth model of the Solow-type and augment it with a random process of innovation allocation. The long term behavior of this model is analyzed. As it turns out, the dynamic behavior of our model differs fundamentally from that of the standard neoclassical growth model. In the long run always one of the regions attracts all the future innovation and growth while the other region stagnates. We show that this outcome results from an externality in the process of innovation allocation and discuss its significance and sensitivity to changes in the model structure. (author's abstract) / Series: Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness"

München, Techn. Univ., Diss., 2010.

Zugl.: Tübingen, Universiẗat, Diss., 2007.

Diss. Wirtsch.-wiss. Zürich, 2005. / Literaturverz.

Zugl.: Tübingen, Univ., Diss., 2007

Empirical Analysis, indicating a negative tradeoff between long-run growth and economic stability appear sensitive with respect to policy intervention. I use a model of fully rational utility maximizing representative agents and profit maximizing firms acquiring rents by inventing a new product variety on which they have market power in a monopolistically competitive goods market. Monopolistic competition has been used in three contexts in modern economics: trade, growth and New Keynesianism. I shall use the latter two, together with a small menu cost argument enabling nominal price rigidity on the goods market, to show that monetary policy can stabilize the economy closer to potential output than laissez-faire in the short run, thereby inducing faster innovation driven endogenous growth in the long run. Whilst the effect of fiscal policy on growth and the effect of monetary policy on levels is not new to endogenous growth and New Keynesian models, respectively, the result of a growth effect of monetary policy, which the model describes, is genuine. Once again, this model is policy-oriented, analyzing the traditional instrument of monetary policy. The result indicates that monetary policy can achieve more than just driving the price level, but that there exist both short-run static and long-run dynamic real effects of monetary policy. Though it is not intended to send a clear political signal to central bankers, the sound theoretical framework of the analysis does allow to conclude that these effects indeed exist, but empirical tests are certainly necessary to detect the correctness of the theoretical conclusion. / Series: Department of Economics Working Paper Series

Zugl.: Bochum, Univ., Diss., 2008

Bachelor-Arbeit Univ. St. Gallen, 2005.

Bachelor-Arbeit Univ. St. Gallen, 2006.

University, Diss., 2004--München.