Twin Engines of Growth

We develop an endogenous growth model in which new technology and new skills are bounded complements they complement each other up to a point, but beyond this the impact of each factor is constrained by the level of the other. As a result, both technological progress and human capital accumulation are necessary for sustained productivity growth, but neither alone is sufficient. Rapid technological progress generates increased returns to education and encourages each generation to spend more time in school. Rapid human capital accumulation increases the feasibility and profitability of innovation and encourages the private business sector to allocate more resources towards R&D. Our model has important implications for the effectiveness of alternative growth promoting policies, for the interpretation of the empirical relationship between growth and schooling, and for the relationship between growth and intergenerational wage dispersion. Keywords: Endogenous technological change, endogenous human capital accumulation, minimum skill requirements, bounded complementarity.Endogenous technological change, endogenous human capital accumulation, minimum skill requirements, bounded complementarity.

Intrinsic Business Cycles with Pro-Cyclical R&D

Recent empirical work finds that R&D expenditures are quite procyclical, even for firms that are not redit-constrained during downturns. This has been taken as strong evidence against Schumpeterian-style theories of business cycles that emphasize the idea that downturns in production may be good times to allocate labor towards innovative activities. Here we argue that the procyclicality of R&D investment is, in fact, quite consistent with at least one of these theories. In our analysis, we emphasize three key features of R&D investment relative to other types of innovative activity: (1) it uses knowledge intensively, (2) it is a long-term investment with uncertain applications and (3) it suffers from diminishing returns over time.Schumpeterian, R&D investment, endogenous cycles, endogenous growth

I - Q Cycles

We develop a model of 'intrinsic' business cycles, driven by the decentralized behaviour of entrepreneurs and firms making continuous, divisible improvements in their productivity. We show how equilibrium cycles, associated with strategic delays in implementation and endogenous innovation, arise even in the presence of reversible investment. We derive the implications for the cyclical evolution of both tangible (physical) and intangible (knowledge) capital. In particular, our framework is consistent with key aspects of the somewhat puzzling relationship between fixed capital formation and the stockmarket at business cycle frequencies.Tobin's Q, fixed capital formation, intangible investment, cycles and growth

Getting Over the Hump: A Theory of Crime, Credit and Accumulation

We explore the implications of endogenous credit market imperfections for the relationship between property crime and the process of economic development. In the initial stages of development, property crime rises as the opportunities to gain from illegal activities expand. In later stages, however, crime falls as capital market imperfections are overcome and legal activities become more profitable. We detail the forces which determine whether the crime generated by an economy's early growth will choke off the development process. We also find that endogenous credit constraints reduce the effectiveness of public expenditures that raise expected criminal sanctions, and that spending on ex ante crime prevention may be more cost-effective. Nous construisons un modèle dans lequel la capacité de l'économie à se développer est déterminée de façon endogène par l'interaction entre les ratés du marché du capital et le taux de crime contre la propriété. Dans les premiers stades du développement économique, les crimes contre la propriété croissent en même temps que la richesse s'accumule, les gains que procure l'activité criminelle étant alors d'autant plus élevés. Mais dans les stades de développement ultérieurs, ces crimes diminuent au fur et à mesure que la richesse s'accumule car les ratés du marché du capital sont de moins en moins importants. Dans certaines économies, les crimes contre la propriété, observables dans les premiers stades du développement, ralentissent et éventuellement arrêtent la croissance économique, alors que dans d'autres, l'économie poursuit sa croissance et atteint la phase de déclin de l'activité criminelle. Insistant sur l'importance des ratés endogènes du marché du capital, nous analysons également l'impact de politiques publiques de prévention et de dissuasion du crime.Crime, property rights economic development, credit markets

Growth, Cycles and Welfare: A Schumpeterian Perspective

We use a Schumpeterian model in which both the economy's growth rate and its volatility are endogenously determined to assess some welfare and policy implications associated with business cycle fluctuations. Because it features a higher average growth rate than its acyclical counterpart, steady-state welfare is higher along the cyclical equilibrium growth path of the model. We assess the impact of alternative stabilization policies designed to smooth cyclical fluctuations. Although, it is possible to significantly reduce the variance of output growth via simple policy measures, the welfare benefits are at best negligible and at worst completely offset by the resulting reduction long-term productivity growth.Endogenous cycles, Endogenous growth, Welfare, Stabilization policy

Using Financial Market Information to Enhance Canadian Fiscal Policy

In this article we argue that the evaluation and implementation of Canadian fiscal policy could be significantly improved through the systematic use of information provided by global financial markets. In particular, we show how the information contained in internationally traded asset returns can be used to (1) provide a more meaningful cyclical-adjustment of the budget deficit, (2) assess the sustainability of the public debt, and (3) reduce the risk of the debt becoming unsustainable without having to run excessively large surpluses.Public debt, cyclically-adjusted deficit, sustainability, hedging

Animal Spirits meets Creative Destruction

We show how a Schumpeterian process of creative destruction can induce rational, herd-behavior by entrepreneurs across diverse sectors of the economy that may look like it is fuelled by ``animal spirits''. Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process. The cyclical equilibrium that we study has a higher average growth rate but lower welfare than the corresponding acyclical one. We find that the cycles generated by our model exhibit several features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth. Nous montrons comment un processus de destruction créatrice Schumpeterien peut entraîner un comportement rationnel de masse ('moutonnier') des entrepreneurs à travers les différents secteurs de l'économie, un comportement qui peut apparaître comme provenant d'effets non fondamentaux ('esprits animaliers'). En conséquence, une économie avec des secteurs multiples dans laquelle les améliorations de productivité sont apportées par des entrepreneurs in-dépendants cherchant un profit peut être caractérisée par des expansions, des ralentissements et des baisses de façon régulière tout en étant une partie intégrante du processus de croissance à long terme. L'équilibre cyclique que nous étudions possède certes un taux de croissance moyen supérieur mais également un niveau de bien-être inférieur par rapport à l'équilibre acyclique correspondant. Nous trouvons que les cycles générés par notre modèle présentent plusieurs caractéristiques des cycles économiques observés dans les données et qu'une relation négative émerge entre la volatilité et la croissance parmis les économies caractérisées par des cycles.Entrepreneurship, innovation, endogenous business cycles, endogenous growth

Twin Engines of Growth

We develop an endogenous growth model in which new technology and new skills are bounded complements -- they complement each other to a point, but beyond this the impact of each factor is constrained by the level of the other. As a result, both technological progress and human capital accumulation are necessary for sustained productivity growth, but neither alone is sufficient. Rapid technological progress generates increased returns to education and encourages each generation to spend more time at school. Rapid human capital accumulation increases the feasability and profitability of innovation and encourages the private business sector to allocate more resources towards R&D. Our model has important implications for the effectiveness of alternative growth-promoting policies, for the interpretation of the empirical relationship between growth and schooling, and for the relationship between growth and intergenerational wage dispersion. Nous développons un modèle de croissance endogène dans lequel la nouvelle technologie et les nouvelles compétences sont des compléments limités -- elles se complémentent jusqu'à un certain point, au delà duquel l'impact de chaque facteur est contraint par le niveau de l'autre. Alors, le progrès technologique et l'accumulation de capital humain sont nécessaires les deux pour une croissance soutenue de la productivité, mais aucun n'est suffisant seul. Un progrès technologique rapide génère des rendements croissants de l'éducation et encourage chaque génération à consacrer plus de temps à l'école. Une accumulation rapide de capital humain accroît la faisabilité et la profitabilité de l'innovation et encourage le secteur privé à allouer plus de ressources en recherche et développement. Notre modèle a des implications importantes pour la relation empirique entre croissance et éducation, et pour la relation entre croissance et dispersion intergénérationnelle des salaires.Endogenous technological change, endogenous human capital accumulation, minimum skill requirements, bounded complementarity

A Molecular Approach to the Diagnosis, Assessment, Monitoring and Treatment of Pulmonary Non-Tuberculous Mycobacterial Disease

Introduction: Non-Tuberculous Mycobacteria (NTM) can cause disease of the lungs and sinuses, lymph nodes, joints and central nervous system as well as disseminated infections in immunocompromised individuals. Efforts to tackle infections in NTM are hampered by a lack of reliable biomarkers for diagnosis, assessment of disease activity, and prognostication. Aims: The broad aims of this thesis are: 1. to develop molecular assays capable of quantifying the 6 most common pathogenic mycobacteria (M. abscessus, M. avium, M. intracellulare, M. malmoense, M. kansasii, M. xenopi) and calculate comparative sensitivities and specificities for each assay. 2. to assess patients’ clinical course over 12 – 18 months by performing the developed molecular assays against DNA extracted from sputum from patients with NTM infection. 3. to assess dynamic bacterial changes of the lung microbiome in patients on treatment for NTM disease and those who are treatment na ve. Methods: DNA was extracted from a total of 410 sputum samples obtained from 38 patients who were either: • commencing treatment for either M. abscessus or Mycobacterium avium complex. • considered colonised with M. abscessus or Mycobacterium avium complex (i.e. cultured NTM but were not deemed to have infection as they did not meet ATS or BTS criteria for disease). • Diagnosed with cystic fibrosis (CF) or non-CF bronchiectasis but had never cultured NTM. For the development of quantitative molecular assays, NTM hsp65 gene sequences were aligned and interrogated for areas of variability. These variable regions enabled the creation of species specific probes. In vitro sensitivity and specificity for each probe was determined by testing each probe against a panel of plasmids containing hsp65 gene inserts from different NTM species. Quantification accuracy was determined by using each assay against a mock community containing serial dilutions of target DNA. Each sample was tested with the probes targeting: M. abscessus, M. avium and M. intracellulare producing a longitudinal assessment of NTM copy number during each patient’s clinical course. In addition, a total of 64 samples from 16 patients underwent 16S rRNA gene sequencing to characterise longitudinal changes in the microbiome of both NTM disease and controls. Results: In vitro sensitivity for the custom assays were 100% and specificity ranged from 91.6% to 100%. In terms of quantification accuracy, there was no significant difference between the measured results of each assay and the expected values when performed in singleplex. The assays were able to accurately determine NTM copy number to a theoretical limit of 10 copies/μl. When used against samples derived from human sputum and using culture results as a gold standard, the sensitivity of the assay for M. abscessus was found to be 0.87 and 0.86 for MAC. The specificity of the assay for M. abscessus was 0.95 and 0.62 for MAC. The negative predictive value of the assay for M. abscessus was 0.98 and 0.95 for MAC. This resulted in an AUC of 0.92 for M. abscessus and 0.74 for MAC. Longitudinal analysis of the lung microbiome using 16SrRNA gene sequencing showed that bacterial burden initially decreases after initiation of antibiotic therapy but begins to return to normal levels over several months of antibiotic therapy. This effect is mirrored by changes in alpha diversity. The decrease in bacterial burden and loss of alpha diversity was found to be secondary to significant changes in specific genera such as Veillonella and Streptococcus. The abundance of other Proteobacteria such as Pseudomonas remain relatively constant. Conclusion: The molecular assay has shown high in vitro sensitivity and specificity for the detection and accurate quantification of the 6 most commonly pathogenic NTM species. The assays successfully identified NTM DNA from human sputum samples. A notable association between NTM copy number and the cessation of one or more antibiotics existed (i.e. when one antibiotic was stopped because of patient intolerance, NTM copy number increased, often having been unrecordable prior to this). The qPCR assays developed in this thesis provide an affordable, real time and rapid measurement of NTM burden allowing clinicians to act on problematic results sooner than currently possible. There was no significant difference between the microbiome in bronchiectasis and cystic fibrosis nor was there a significant difference between the microbiome in patients requiring treatment for NTM and those who did not. Patients receiving treatment experienced an initial decrease in bacterial burden over the first weeks of treatment followed by a gradual increase towards baseline over the next weeks to months. This change was mirrored in measures of alpha diversity. Changes in abundance and diversity were accounted for by decreases in specific bacteria whilst the abundance of other bacteria increased, occupying the microbial niche created. These bacteria (for example Pseudomonas spp) are often associated with morbidity.Open Acces

Housing Liquidity, Mobility, and the Labour Market

We study the interactions among geographical mobility, unemployment and home-ownership in an economy with heterogeneous locations, endogenous construction and search frictions in the markets for both labour and housing. The decision of home-owners to accept job offers from other cities depends on how quickly they can sell their houses (i.e. their liquidity), which in turn depends on local labour market conditions. Consequently, home-owners accept job offers from other cities at a lower rate than do renters, generating a link between home-ownership and aggregate unemployment. When calibrated to match aggregate U.S. statistics on mobility, housing and labour flows, our model predicts that the effect of home-ownership on aggregate unemployment is small. When unemployment is high, however, changes in the rate of home-ownership can have economically significant effects.liquidity, mobility, home-ownership, unemployment