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...

This paper modifies Van den Berg's (1990) nonstationary model of search, considering the existence of a firing probability. The presence of firing makes unemployed workers lower their reservation wage because of the entitlement effect embodied in accepting a job offer. In this nonstationary...

In this paper we present a class of binary choice models for panel data with the following features : (i) The explanatory variables are predetermined but not strictly exogenous. (ii) Individual effects are allowed to be correlated with the explanatory variables.

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...