The typical shape of our model's two-dimensional hazard and its changes over time necessarily depend upon the distributions of menu costs and fixed order costs. We calibrate these distributions using firm-level pricing data (as used by Midrigan (2006)) alongside aggregate data on inventories,...

At the household level, the model predicts very low rates of savings for poor households, and high level of intergenerational persistence in both wealth and education. Poverty is persistent across generations as poor households are unable to undertake the large investments in education that are...