This paper examines the implications of income redistribution on human capital accumulation and income inequality, presenting a model where human capital investment is indivisible and agents differ in economic opportunity as well as intellectual ability. It is shown that the impact of...

According to the classical view, an economy's lender of last resort should be its central bank. For brief periods of time, the bank might suspend convertibility in order to provide the liquidity needed to support the domestic credit market. Recent experience of financial crises demonstrates the...