We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more “radical” innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both...

In this paper I formulate a continuous time and continuous space version of Harris and Vickers (1987) Racing Under Uncertainty with potentially asymmetric players. To prove the existence and uniqueness of the equilibria, I use a boundary value problem formulation which is novel to the dynamic...

The recent economic crisis highlights the role of financial markets in allowing economic agents, including prominent banks, to speculate on the future returns of different financial assets, such as mortgage-backed securities. This paper in troduces a dynamic general equilibrium model with...

We extend the basic Schumpeterian endogenous growth model by allowing incumbents to undertake innovations to improve their products, while entrants engage in more radical innovations to replace incumbents. Our model provides a tractable framework for the analysis of growth driven by both entry...

<script type="text/javascript" src="https://cdnjs.cloudflare.com/ajax/libs/mathjax/2.7.1/MathJax.js?config=AM_HTMLorMML-full"></script>We study a flexible dynamic savings game in continuous time, where decision makers rotate in and out of power. These agents value spending more highly while in power creating a time-inconsistency problem. We provide a sharp characterization of Markov equilibria. Our analysis proceeds by...

Two competitors with different abilities engage in a winner-take-all race; should we handicap the advantaged competitor in order to reduce the expected completion time of the race? I show that if the discouragement effect is strong, i.e., both competitors are discouraged from exerting effort when...

The Great Recession, the Great Depression, and the Japanese slump of the 1990s were all preceded by periods of major technological innovation, which happened about 10 years before the start of the decline in economic activity. In an attempt to understand these facts, we estimate a model with...