We offer an explanation, drawn from first principles, of the belief that the consumption needs of the asset-poor are best met by debt contracts, whereas equity arrangements are tailored to the financing requirements of poor entrepreneurs.

We show that the interest rate cannot both coordinate the savings plans of borrowers and lenders and equal the marginal product of capital.

Purpose – The purpose of this paper is to appraise the transition from bank-based systems to universal banking. Design/methodology/approach – The Wynne Godley and Francis Cripps macroeconomic framework is used to structure the argument. Findings – It is shown that the activity of...

We model the interaction between capitalists and entrepreneurs as a dynamic game. The open-loop Nash equilibrium and the closed-loop Nash equilibrium are distinguished. The purpose is to answer some questions that have arisen in the development of profit-led versus wage-led growth models. We...