We consider a neoclassical interpretation of Germany and Japan's rapid postwar growth that relies on a catch … and investment, we are able to capture many of the key empirical properties of Germany and Japan's postwar transitions …

and low growth rate economies. Here, more than forty percent of the growth differential is due to the efficiency effect …

for missing credit and insurance markets. The resulting tradeoffs for growth and efficiency are explored, both … to higher income growth than taxes and transfers, but at the cost of lower insurance. Overall efficiency is assessed … welfare function, does not reward equality per se. Simulations using empirical parameter estimates show that the efficiency …