This paper studies the effect of sovereign risk on capital flows from rich to poor nations in the context of a two-country model, where Foreign Direct Investment (FDI) creates positive externalities in domestic production. We show that if externalities are large, a developing country never...

The quasi-geometric (hyperbolic) literature typically assumes that agents are short-run impatient. In this paper, we deviate from this assumption by considering an economy in which a fraction of the population is short-run patient and the remaining population is short-run impatient. In a...

This paper studies the business cycle dynamics of income and wealth distributions in the context of the neoclassical growth model where agents are heterogeneous in initial wealth and non-acquired skills. Our economy admits a representative consumer which enables us to characterize distributive...

This paper studies a discrete-time utility maximization problem of an infinitely-lived quasi-geometric consumer whose labour income is subject to uninsurable idiosyncratic productivity shocks. We restrict attention to a first-order Markov recursive solution. We show that under the assumption of...

This paper studies a complete-market version of the neoclassical growth model, where agents face idiosyncratic shocks to eearnings. We show that if agents possess identical preferences of either the CRRA or the addilog type, then the heterogeneous-agent economy behaves as if there was a...