We explore the impact of non-collusive corruption on factor rewards and on the wealth distribution. We show that the distributional consequences depend crucially on the degree of capital market imperfections. With perfect capital markets, corruption does not redistribute wealth within the...

When it comes to economic reforms in developing countries, many economists agree on broad objectives (such as fostering outward orientation). Broad objectives, however, can be pursued in many different ways, and policy experimentation is often indispensable for learning which alternative works...

Introducing the concept of “belief entrepreneur”, this paper offers a novel framework of endogenous belief formation under fundamental uncertainty. We consider a generic setup in which individuals must choose between a tested approach (supplied by a “defender”) and a competing innovative...

A large informal sector and widespread poverty are often regarded as two closely intertwined problems. This paper explores how informality and poverty respond to different options for regulatory and policy reform. To do so, we propose a structural model and calibrate it to survey data from...

The empirical literature on the relationship between inequality and growth offers a contradictory assessment: Estimators based on time-series variation indicate a positive link while estimators (also) exploiting the cross-sectional variation suggest a negative relationship. The present paper (i)...