We analyze an overlapping generations model which explicitly includes a secondary asset market. The economy is affected by a onetime shock which causes some of these assets to become toxic. As a response the government may intervene by buying these assets at market value and removing them from...

The Jewish and the Arab sectors in Israel differ widely in every aspect of their respective socio-economic status. In particular, investment in education is much lower in the Arab sector and so is the educational attainment. To explain these differences, we construct a simple model which allows...

What determines the direction of technological progress is one of the central questions that economics needs to answer. By introducing a small but fundamental generalization of Acemolgu (2002) the current paper points out the key determinants of that direction. The extended model argues that...