The authors study a one-sector growth model where capital investment is credit financed and there is an adverse selection problem in credit markets. The presence of adverse selection creates an indeterminacy of equilibrium. Many equilibria display permanent fluctuations characterized by...

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In...

To address how technological progress in financial intermediation affects the economy, a costly-state verification framework is embedded into the standard growth model. The framework has two novel ingredients. First, firms differ in the risk/return combinations that they offer. Second, the...

What caused the baby boom? And can it be explained within the context of the secular decline in fertility that has occurred over the last 200 years? The hypothesis is that:(a) The secular decline in fertility is due to the relentless rise in real wages that increased the opportunity cost of...

This paper adopts Keynes' view that shocks to the marginal efficiency of i nvestment are important for business fluctuations, but incorporates i t in a neoclassical framework with endogenous capacity utilization. I ncreases in the efficiency of newly produced investment goods stimula te the...