Bhattacharya, Joydeep; Qiao, Xue; Wang, Min - Department of Economics, Iowa State University - 2014
This paper studies the evolution of wealth inequality in an economy with endogenousborrowing constraints. In the model economy, agents need to borrow to finance humancapital investments but cannot commit to repaying their loans. Creditors can punishdefaulters by banishing them permanently from...