On the optimal control of a linear neutral differential equation arising in economicsJournal articleRaouf Boucekkine, Patrick A. Pintus et Giorgio Fabbri, Optimal Control Applications and Methods, Volume 33, Issue 5, pp. 511-530, 2012

In this paper, we apply two optimization methods to solve an optimal control problem of a linear neutral differential equation (NDE) arising in economics. The first one is a variational method, and the second follows a dynamic programming approach. Because of the infinite dimensionality of the NDE, the second method requires the reformulation of the latter as an ordinary differential equation in an appropriate abstract space. It is shown that the resulting Hamilton–Jacobi–Bellman equation admits a closed-form solution, allowing for a much finer characterization of the optimal dynamics compared with the alternative variational method. The latter is clearly limited by the nontrivial nature of asymptotic analysis of NDEs. Copyright © 2011 John Wiley & Sons, Ltd.

History’s a curse: leapfrogging, growth breaks and growth reversals under international borrowing without commitmentJournal articleRaouf Boucekkine et Patrick A. Pintus, Journal of Economic Growth, Volume 17, Issue 1, pp. 27-47, 2012

A simple open-economy AK model with collateral constraints accounts for growth breaks and growth-reversal episodes, during which countries face abrupt changes in their growth rate that may lead to either growth miracles or growth disasters. Absent commitment to investment by the borrowing country, imperfect contract enforcement leads to an informational lag such that the debt contracted upon today depends upon the past stock of capital. The no-commitment delay originates a history effect by which the richer a country has been in the past, the more it can borrow today. For (arbitrarily) small delays, the history effect offsets the growth benefits from international borrowing and dampens growth, and it leads to both leapfrogging in long-run levels and growth breaks. When large enough, the history effect originates growth reversals and we connect the latter to leapfrogging. Finally, we argue that the model accords with the reported evidence on changes in the growth rate at break dates. We also provide examples showing that leapfrogging and growth reversals may coexist, so that currently poor but fast-growing countries experiencing sharp growth reversals may end up, in the long-run, significantly richer than currently rich but declining countries.

Book review of "Expectations, Employment and Prices" by Roger Farmer.Journal articlePatrick A. Pintus, Journal of Economic Literature, Volume 50, Issue 1, pp. 184-187, 2012

"Expectations, Employment and Prices" by Roger E. A. Farmer. The EconLit Abstract of the reviewed work begins: Presents a Keynesian economics-based analysis of the business cycle and how to control it, focusing on the inefficiency of the equilibrium level of unemployment. Discusses the basic model; an extension to multiple goods; a model with investment and saving; a new way to understand business cycle facts; the Great Depression—telling the Keynesian story in a new way; the wartime recovery—a dynamic model where fiscal policy matters; the U.S. economy from 1951 to 2000—employment and gross domestic product; money and uncertainty; money and inflation since 1951; and how to fix the economy. Farmer is Professor and Department Chair of the Department of Economics at the University of California, Los Angeles. Bibliography; index.

International capital flows, debt overhang and volatilityJournal articlePatrick A. Pintus, International Journal of Economic Theory, Volume 7, Issue 4, pp. 301-315, 2011

No abstract is available for this item.

Collateral constraints and the amplification-persistence trade-offJournal articlePatrick A. Pintus, Economics Letters, Volume 110, Issue 1, pp. 64-66, 2011

This note shows - in a general-equilibrium, two-agent model featuring concave utility and production functions and neo-classical input accumulation - that the amplification and persistence of the impact of temporary shocks to aggregate productivity go hand in hand.

Addendum to: "Linearly progressive income taxes and stabilization" [Res. Econ. 61 (2007) 25-29]Journal articleNicolas L. Dromel et Patrick A. Pintus, Research in Economics, Volume 63, Issue 2, pp. 144-144, 2009

No abstract is available for this item.

Note On Convergence Under Income Tax ProgressivityJournal articlePatrick A. Pintus, Macroeconomic Dynamics, Volume 12, Issue 02, pp. 286-299, 2008

No abstract is available for this item.

Laffer traps and monetary policyJournal articlePatrick A. Pintus, Federal Reserve Bank of St. Louis Review, Volume 90, Issue 3, pp. 165-174, 2008

This article focuses on the interaction, in a stylized economy with flexible prices, of monetary and fiscal policy when both are active-active in the sense that how the policy instrument is set depends on the state of the economy. Fiscal policy finances a given stream of government expenditures through distortionary labor taxes, and it operates under a strict balanced-budget rule. If monetary policy is passive, the economy may occasionally switch, because of self-fulfilling expectations, from the neighborhood of a "Laffer trap" equilibrium to the saddle-path leading to the high-welfare steady state. In the low-welfare stationary state, output, investment, and consumption are low while the tax rate is correspondingly high. However, active monetary policy may, by following a rule such that the nominal interest rate responds positively to the state of the economy, push the economy toward the high-welfare equilibrium and rule out expectation-driven business cycles.

Are Progressive Income Taxes Stabilizing?Journal articlePatrick A. Pintus et Nicolas L. Dromel, Journal of Public Economic Theory, Volume 10, Issue 3, pp. 329-349, 2008

We assess the stabilizing effect of progressive income taxes in a monetary economy with constant returns to scale. It is shown that tax progressivity reduces, in parameter space, the likelihood of local indeterminacy, sunspots and cycles. However, considering plausibly low levels of tax progressivity does not ensure saddle-point stability and preserves as robust the occurrence of sunspot equilibria and endogenous cycles. It turns out that increasing progressivity, through its impact on after-tax income, makes labor supply more inelastic. However, even when large, tax progressivity does not neutralize the effects of expected inflation on current labor supply which may lead to expectation-driven business fluctuations. Copyright � 2008 Blackwell Publishing, Inc..

Linearly progressive income taxes and stabilizationJournal articleNicolas L. Dromel et Patrick A. Pintus, Research in Economics, Volume 61, Issue 1, pp. 25-29, 2007

No abstract is available for this item.