Aghion, P. and P. Bolton (1997, "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, 59, 151-172) provide a model analyzing the effect of capital accumulation on income inequality. We integrate two additional features to a modified version of this model. The first one...

We develop an endogenous growth model with overlapping generations taking into account important characteristics of the developing countries: high public external debt and large informal sector. We show that an increasing of the public external debt has two opposite effects. On the one hand, it...