CentER

Erik Canton

Abstract:
This thesis contains five essays on economic growth and business cycles. The main focus is on the interaction between economic growth and the cycle: is cyclical variability good or bad for the long-run rate of economic growth? The introduction aims to provide some empirical evidence for an investment-driven growth experience in a group of OECD countries over the post-war period, and examines some salient business cycle facts. The second chapter analyses the macroeconomic effects of demographic transitions like the baby-boom/baby-bust and the expected ageing process. Chapter three explores the effect of business cycle fluctuations on the optimal accumulation of human capital and economic growth. The model predicts a strong positive interaction between economic growth and the cycle, since people spend more time on learning as a way to insure themselves against future income losses. The fourth essay deals with the effect of learning-by-doing on creative destruction and entrenchment within a neo-Schumpeterian framework. Also here we find a positive relationship between economic growth and cyclical variability. The last chapter investigates the effect of government policy on economic growth and business cycle fluctuations, in the presence of random income taxation.