Entrepreneurship, growth and total factor productivity are larger when asset prices are high and decline during financial crises. We explain these facts using a growth model with bubbles in which individuals have heterogeneous wages and returns on productive investment. Heterogeneity separates...

In this paper, we build a model that, according to the empirical evidence, gives raise to oscillations in wealth within a dynasty while keeping inter-generational persistence in education attainment. The mechanism that we propose is based on the interaction between effort and wealth suggested by...

We analyze the welfare properties of the competitive equilibrium in a capital accumulation model where individual preferences are subject to both habit formation and consumption spillovers. Using an additive specification for preferences, according to which the argument in the utility function...

This paper develops an endogenous growth model where sustained growth is due to the introduction of a public input. Consumers derive utility from consumption, leisure and a public good. The public input and the public good are the flow of government expenditures. These expenditures are financed...

We analyze the welfare properties of the competitive equilibrium in a capital accumulation model where individual preferences are subject to both habit formation and consumption spillovers. Using an additive specification for preferences, according to which the argument in the utility function...

In this paper we derive the general framework for growth models with non competitive labor and output markets and disequilibrium unemployment. For the three standard ways of generating savings, the framework makes clear how capital growth depends on employment and employment on the stock of...

This paper develops an endogenous growth model where sustained growth is due to the introduction of a public input. Consumers derive utility from consumption, leisure and a public good. The public input and the public good are the flow of government expenditures. These expenditures are financed...

This paper provides a new rationale for the positive effect of public capital stock on employment and wages. We show that higher levels of public capital reduce wages along the wage equation and enhance employment due to the resulting larger elasticity of labour demand with respect to wages. The...

We develop a growth model with unemployment due to imperfections in the labor market. In this model, wage inertia and balanced budget rules cause a complementarity between capital and employment capable of explaining the existence of multiple equilibrium paths. Hysteresis is viewed as the result...

We analyze the welfare properties of the equilibrium path of a growth model where both habits and consumption externalities affect the utility of consumers. Our analysis highlights the crucial role played by complementarities between externalities and habits in order to generate an inefficient...