Unit roots in output, an exponential 2% rate of convergence and no change in the underlying dynamics of output seem to be three stylized facts that can not go together. This paper extends the Solow-Swan growth model allowing for cross-sectional heterogeneity. In this framework, aggregate shocks...

We claim that the stock market encourages business creation, innovation, and growth by allowing the recycling of "informed capital". Due to incentive and information problems, new start-ups face high flotation costs. Sustaining a tight relationship with a monitor allows them to postpone their...

It is well known from time series analysis that shocks to aggregate output have very persistent effects. This paper argues that the relation between the expected growth rate of a firm and its size\ provides a microfoundation for such aggregate persistence. The empirical evidence indicates that...

Spain has had a serious structural unemployment problem for the last 20 years. This paper argues that the interaction of /ring costs and job-to-job 0ows added to changes in unemployment bene/ts, could provide an explanation for equilibrium unemployment increasing, since 1984. First, we construct...

Before implementation, a new idea is a private good as it is both rivalrous and excludable. Its widespread economic consequences arise only when a researcher finds the market resources that suit its economic applicability. In this context we analyse how an increase in the size of business...