Endogenous Growth, Market Failures and Economic Policy

MARTIN ZAGLER is Assistant Professor, Vienna University of Economics & B.A., Vienna. He previously studied at the J. Kepler-University of Linz, University of Aix-Marseille II, Vienna University of Economics & B.A., The Vienna Institute for Advanced Studies, and the European University Institute, Florence. He received the Stephan-Koren Price for the best dissertation at the Vienna University of Economics & B.A. in 1995/96 and the Theodor-Körner Price for his contribution to Growth policy in 1997. His fields of research are Intertemporal Macroeconomics, Endogenous Growth, New Keynesian Economics and Monetary and Exchange Rate Economics.

• List of Figures and Tables Acknowledgements Introduction: the Empirics of Economic Growth PART I: FISCAL POLICY Economic Growth, Environmental Damage, and Sustainable Taxation Endogenous Growth, Division of Labour, and Fiscal Policy Debts, Deficits, and Economic Growth PART II: MONETARY POLICY Monetary Policy in a New Keynesian Model of Endogenous Growth Foreign Indebtedness Inflation, and Exchange Rate Overshooting PART III: TRADE POLICY Protectionism, Trade, and Growth Estimating Growth Conclusion: Policy Implications Appendix Endnotes Bibliography Name Index Subject Index

'Growth does not come like manna from heaven. This book explains why and gives the empirical results to show it. It thus allows challenging discussions of the trade-off between environment and growth and the effects of economic policy on growth. A novel feature of the book is the analysis of growth in open economies and, more particularly, the growth effects of the Common Market.' - Rick van der Ploeg, Professor of Political Economy, University of Amsterdam and member of the Dutch Parliament 'This book is required reading for economists dealing with long-run growth. It combines compelling empirical and theoretical analysis to provide informed policy advice.' - Professor Christian Keuschnigg, Department of Economics, University of Saarland 'Dr. Zagler's book is a stimulating combination of sound theoretical analysis and relevant economic policy applications. It demonstrates that the theory of Endogenous Growth can provide a valuable basis for discussions of real-world problems.' - Professor Dr. Ewald Nowotny, M.P., Vienna University of Economics and Business Administration. Chairman of the Finance Committee of the Austrian Parliament 'During the last two decades P. Romer's seminal contributions revolutionised our view of economic growth. Zagler's work extends in an original and path-breaking way the basic model and tries to answer several important questions, for instance: How does an environmental constraint fit into endogenous growth theory? What are the implications of foreign indebtedness or of protectionism? Can we observe long-run effects of short-run monetary policies in an endogenous growth context? This excellent book should be carefully studied by all economists interested in endogenous growth theory and some of its less obvious economic policy conclusions.' - Professor Dr. Herbert Walther 'The book is...an important and stimulating contribution to the theory and empirics of economic growth, also providing new perspectives on policies aimed at fostering growth.' - Maurizio Baussola, Catholic University, Piacenza