Armenter, Roc; Lahiri, Amartya - In: Journal of Monetary Economics 59 (2012) 6, pp. 550-564
Cross-country income gaps are large in the data. Can observed investment prices account for these gaps? Our model adds an extensive margin to the neoclassical growth model by allowing for entry of firms. When combined with a “returns to variety” effect, our model provides an amplification...