In this paper we offer an explanation why a poor majority does not necessarily expropriate a rich minority. We present a dynamic model in which individuals are willing to accept an unequal distribution of income in the current period if they are sufficiently optimistic about their future...

We develop a model of growth and distributional conflict which demonstrates that social tensions may peak at an intermediate development stage. In fact, unless the economy is caught in an underdevelopment trap, the relationship between average wealth and the likelihood of radical redistribution...

This paper offers an explanation why most democracies are characterized by moderate taxation of wealth although the wealth distribution is persistently skewed to the right. We model an economy in which agents have to acquire higher education to qualify for skilled work and in which capital...

In U.S. data 1981–2012, unsecured firm credit moves procyclically and tends to lead GDP, while secured firm credit is acyclical; similarly, shocks to unsecured firm credit explain a far larger fraction of output fluctuations than shocks to secured credit. In this paper we develop a tractable...

In U.S. data 1981-2012, unsecured firm credit moves procyclically and tends to lead GDP, while secured firm credit is at best acyclical. In this paper we develop a tractable dynamic general equilibrium model in which unsecured firm credit arises from self-enforcing borrowing constraints...