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...

Based on a general growth model, this paper finds that the steady-state direction of technological progress is determined by the scale return of the production function and the relative factor supply elasticities. A specific version of that model extends Acemoglu (2002) to provide the underlying...

The article is concerned with understanding the impact of social preferences and wealth inequality on aggregate economic outcomes. We investigate how different manifestations of societal other-regarding preferences affect labor relationships and incentive contracts at the microeconomic level and...

The article is concerned with understanding the impact of social preferences on the optimal organizational design of firms. We consider a moral-hazard environment with inferiority averse workers. The integration of workers in one organizational unit yields productive complementarities but also...