Do fiscal stabilization policies affect the long-term growth of the economy? If so, are the long-term effects growth enhancing or growth reducing? When addressing these questions from a theoretical perspective, the literature has typically emphasized the importance of structural aspects such as the modeling approach of endogenous technological change while paying less attention to an elaborate design of the considered fiscal stabilization policies. This paper uses an agent-based macroeconomic model that generates endogenous business cycles to emphasize the role of the policy design for long-term growth effects of stabilization policies. By comparing a demand-oriented consumption policy and two different investment subsidizing policies, it can be shown that these policies are successful in smoothing the business cycle but differ in terms of their effects on economic long-term growth. This highlights the importance of policy design for the analysis of long-term effects of stabilization policies.

A wage setting process defined in terms of wage per hour is the key factor for obtaining negative optimal trend inflation in a closed economy. However, this inflation will be zero if the process is established on the wage per unit of human capital. The origin of both results is a dynamic mechanism that, with some differences, makes possible the attainment of a situation equivalent to wage flexibility. Finally, while the effect of trend inflation on the long-run growth rate is tiny in the first case, it is much more important in the second, highlighting the relevance of this approach.

The influence of local precipitation and temperature on long-term growth dynamics in two species of seasonally dry tropical forest trees were investigated. Growth records were extracted from tree rings in Guanacaste province, Costa Rica. These chronologies provide a long-term (c. 85-y) record of tree growth for two species with contrasting phenologies. Annual growth, in both species, was dependent on annual and/or monthly variation in local precipitation but less so on temperature. For each species, however, patterns of growth reflected unique degrees of sensitivity to monthly rainfall and rainfall during previous years. It is hypothesized that such differences were due to the rooting depth of these species. A review of the literature also indicated similar diverse cambial growth responses by tropical trees to variation in annual and monthly climate. Lastly, it was shown that variation in longer term fluctuations in the Pacific and Atlantic oceans, as measured by the El Niño Southern Oscillation (ENSO) and North Atlantic Oscillation (NAO), significantly influenced local precipitation in Guanacaste only during the wettest portion of the wet season. Such temporal sensitivity may have differentially influenced the longer-term growth of some tropical tree species but not others. Together, these results support the hypothesis that tropical tree species respond individualistically to variation in local and regional climate and that some tropical assemblages may in fact be structured by species-specific differences in soil water-use.