The path of economic development for rich industrialized countries is typically to transit from farming to manufacturing to services. To do so requires corresponding productivity gains to pull the economy from one sector to the next one. For example, the US and Japan developed their...

Previous tests of efficient risk sharing have assumed that households have identical risk preferences. This assumption is equivalent to the restriction that households can pool their resources, but cannot optimally allocate them according to individual risk preferences. In this paper, we first...

We present a model in which capital assets can only be owned by members of a small politically-connected elite ("the oligarchs"), each member of which faces a given risk of being expropriated, and we investigate the implications of such an imperfection of property rights for the transition to a...

Received wisdom maintains that LDCs ought to pursue pro-growth fiscal policy if it is incentive-feasible. We extend a standard model of growth to include imperfect, endogenously determined, property rights, and re-examine the welfare consequences of fiscal policy. Contrary to conventional...

This paper provides a unified theory of the economic and demographic transition. The main mechanism is based on optimal decisions about fertility and time investments in heterogeneous types of human capital. These decisions depend on different dimensions of health, which themselves are...

Despite the general belief among economists on the growth-enhancing role of international trade and significant trade opening over the past 25 years, the growth performance of many developing economies, especially of those in Latin America and Africa, has been disappointing. While this poor...

I construct a heterogeneous agents economy that mimics the time-series behavior of the US earnings distribution from 1963 to 2003. Agents face aggregate and idiosyncratic shocks and accumulate real and financial assets. I estimate the shocks driving the model using data on income inequality, on...