Why do fertility rates vary so much across countries? Why are European fertility rates so much lower than American fertility rates? To answer these questions we extend the Barro—Becker framework to incorporate the decision to accumulate human capital (which determines earnings) and health capital (which determines life span). We find that cross-country differences in productivity and taxes go a long way toward explaining the observed differences in fertility and mortality.

The authors' aim in this paper is to exposit a convex model of equilibrium growth. The model has two features that distinguish it from most other work on the subject: first, the model is convex on the technological side and, second, fixed factors are explicitly included. Existence and characterization results are provided along with some preliminary analyses of taxation and international trade policies. It is shown that the long-run growth rate in per capita consumption depends, in the natural way, on the parameters describing tastes, technology, and policies. It is demonstrated that, in a free-trade equilibrium with taxation, national growth rates of consumption and output need not converge. Copyright 1990 by University of Chicago Press.

The authors study the problem of optimal taxation in three infinite-horizon, representative-agent endogenous growth models. The first model is a convex model in which physical and human capital are perfectly symmetric. The authors' second model incorporates elastic labor supply through a Lucas-style technology. Analysis of these two models points out the danger of assuming that government expenditures are exogenous. In their third model, the authors include government expenditures as a productive input in capital formation, showing that the limiting tax rate on capital is no longer zero. In numerical simulations, they find similar effects on growth and welfare in all three models. Copyright 1993 by University of Chicago Press.

This paper shows that a macro model with segmented financial markets can generate sizable movements in housing prices in response to changes in credit conditions. We establish theoretically that reductions in mortgage rates always have a positive effect on prices, whereas the relaxation of loan-to-value constraints has ambiguous effects. A quantitative version of the model under perfect foresight accounts for about one-half of the observed price increase in the United States in the 2000s. When we include shocks to expectations about housing finance conditions, the model’s ability to match house values improves significantly. The framework reconciles the observed disconnect between house prices and rents since, in general equilibrium, financial shocks can decrease rents and increase prices. (JEL E44, G21, R31)