We address the fundamental issues of existence and efficiency of an equilibrium in a Ramsey model with many agents, where agents have heterogeneous discounting, elastic labor supply and face borrowing constraints.The existence of rational bubbles is also tackled. In the first part, we prove the...

We explore the link between wealth inequality and business cycle fluctuations in a two-sector neoclassical growth model with endogenous labor and heterogeneous agents. Assuming that wealth inequality is described by the distribution of shares of capital, we show that in the most plausible...