Walrasian General Equilibrium Allocations and Dynamics in Two-Sector Growth Models

This paper analyzes and solves miniature Walrasian general equilibrium systems of momentary and moving equilibria. The Walrasian framework encompasses the fundamental neoclassical and classical two‐sector growth models; the families of solutions of steady‐state and persistent growth per capita in various competitive two‐sector economies are parametrically characterized. Moreover, the endogenous behavior of relative prices and the sectoral allocation of primary factors are analyzed in detail. The technology parameters of the capital good industry are decisive for obtaining long‐run per capita growth in closed (global) economies. A review of the literature complements the theorems on the general equilibrium allocations, dynamic systems, and the time paths of Walrasian two‐sector economies.     

COSTS OF HOUSING CRISES: INTERNATIONAL EVIDENCE

This paper analyses the costs of housing crises in terms of GDP growth and the economic conditions under which crises are particularly costly. Housing crises are often followed by recessions that are longer than other recessions. According to empirical estimates, a housing crisis reduces the GDP growth rate in the following year on average by two percentage points and has still a considerable negative impact in the second year. One important channel through which the effect of housing crises is passed on seems to be the banking sector. In addition, our results suggest that negative wealth effects possibly cause further reductions in GDP growth.