This paper develops a model in which two information frictions are embedded into an otherwise conventional neoclassical growth model; an adverse selection problem in the labor market and a costly state verification problem in the credit market. The former allows equilibrium unemployment to arise...

This paper develops a model in which two information frictions are embedded into an otherwise conventional neoclassical growth model; an adverse selection problem in the labor market and a costly state verification problem in the credit market. The former allows equilibrium unemployment to arise...

This paper develops a model in which two information frictions are embedded into an otherwise conventional neoclassical growth model: an adverse selection problem in the labor market and a costly state verification problem in the credit market. The former allows equilibrium unemployment to arise...