The reasons for the current financial crisis are analysed and a proposal for financing a bad bank is made. In particular, it is proposed to give the banks in trouble government zero bonds rather than cash in exchange for their toxic assets. The term of the zero bonds is determined individually...

The paper argues that, from a dynamic efficiency perspective, intersections of factor price frontiers are irrelevant to the choice of techniques. Because every change in technique involves a temporary loss or gain in both profit and per capita consumption within the transition period, its...