The neoclassical growth model focuses on factor accumulation as an engine of growth, while the neo-Schumpetarian growth model stresses innovation. This paper argues that these two views of growth may capture different phases of a single growth experience. In the model presented below, the balanced growth path is unstable and the economy achieves sustainable growth through cycles under an empirically plausible condition, perpetually moving back and forth between two phases. One phase is characterized by higher output growth, higher investment, no innovation, and a competitive market structure. The other phase is characterized by lower output growth, lower investment, high innovation, and a more monopolistic market structure. Both investment and innovation are essential in sustaining growth indefinitely, and yet they move in an asynchronized way; only one of them appears to play a dominant role in each phase. The economy grows faster along the cycles than along the Zunstable. balanced growth path.

This paper demonstrates that an optimizing model of a monetary economy can produce perfect foresight equilibria in which the price level fluctuates forever. Cyclically or chaotically fluctuating equilibria are more likely to exist when the rate of money supply growth is high. Furthermore, the set of equilibrium prices may have a complicated topological structure, which poses a more serious problem concerning the validity of comparative statics method than any sort of indeterminacy previously discussed in the literature.

This paper studies mechanisms behind the rise of mass consumption societies. The development process depicted follows the Flying Geese pattern, in which a series of industries take off one after another. As productivity improves in these industries, each consumer good becomes affordable to an increasingly large number of households, which constantly expand the range of goods they consume. This in turn generates larger markets for consumer goods, which leads to further improvement in productivity. For such virtuous cycles of productivity gains and expanding markets to occur, income distribution should be neither too equal nor too unequal. With too much equality, the economy stagnates in a poverty trap. With too much inequality, the development stops prematurely.

Most policy debates on regional policies implicitly assume that there is too much concentration. In our two-region economy model of migration, desirable concentration fails to occur under some conditions, and undesirable concentration occurs in others. In the latter case, even though the individuals collectively prefer to be distributed evenly across the two regions, they end up concentrating into one region in their pursuit of better life. Hence, the freedom to move can be self-defeating. The authors characterize the conditions for such self-defeating concentration. The coordination failures between the entry decision of service firms and the migration decision of individuals are caused by the incompleteness of markets due to the endogeneity of the range of services available, which deprive the agents of the opportunity to signal demand and supply for potential services. The argument does not rely on price distortions, the nonconvexities implied by increasing returns and nontradedness, congestion externalities) nor myopia in migration decisions.