We argue that the behavior of manufacturing inventories provides evidence against models of business cycle fluctuations based on productivity shocks, increasing returns to scale, or favorable externalities, whereas it is consistent with models with short-run diminishing returns and procyclical...

This paper analyzes the political economy of growth as an issue of inter-generational distribution. The first part of the paper develops a model of endogenous growth via accumulation of knowledge in a finite-horizon overlapping generations setting. equilibrium growth is enefficient due to the...