Thank you very much for your constructive and thorough evaluation of my note, and for your time and attention. I appreciate that you checked the algebra and, apart from the error in my equation (9p), found no mistake. Thank you also for the detailed analysis you have prepared in the report. The argument developed there is, I think, at the very core of the topic and provides a perfect basis for analyzing the problem further. I am happy to say that I am in full agreement with the algebra given in your report. Thus we are of one mind on the mechanical aspects of the issue and can proceed trying to determine the basic issues which the mathematics hides rather than exposes. In the following, I will denote equation numbers referring to the the original paper by adding a “p ” to the respective number, and to equations in the referee report by adding an “r”. Equations in this reply are referred to by their number without any addition. So (1r) refers to equation (1) in the report, (1p) refers to equation (1) in the original paper, and (1) refers to equation (1) given below. Let me state right at the beginning that I did not, in my note, intend to judge the step-by-step logic of Barro’s analysis. Rather, I wanted to take an agnostic stand o
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