In this paper we combine liquidity constrained lenders and borrowers in a market for investment projects that is characterized by incomplete information. The assumption of different probability distributions of the investment projects creates an adverse selection problem which gives rise to...

The possibility of indeterminacy and sunspot fluctuations in dynamic rational expectations models has been often questioned on empirical grounds, for such models are widely believed to rely on implausibly high degrees of increasing returns to scale and/or other controversial calibrations of...

The aim of this paper is to examine whether the development of waste recycling activities can be a source of economic fluctuation. We assume that the recycling sector has four fundamental characteristics. (i) The production factors are restricted by the production of the last period. (ii) These...

In this paper, we consider the determinacy of equilibrium prices, interest rate and income in an economy with liquidity constraints and capital accumulation. In particular, we show that, even though no extrinsic uncertainty effects fundamentals, under some conditions, rational expectations...

It is well known from the literature that the introduction of financial constraints in economies with infinite-lived agents can be responsible for the occurrence of multiple equilibria and en- dogenous fluctuations. However, the question of the persistence of such phenomena when the constraints...

We study a pure exchange economy with infinite-lived agents, in which a share of consumption purchases must be paid cash. The economy may exhibit multiple equilibria, no matter what the fundamental specification, the only requirement being a share of consumption to be paid cash sufficiently low....

An increasing literature fosters selective immigration policies as a tool to increase human capital in both source and destination countries. These policies are supposed to prompt incentives to education, and-if selection is sufficiently severe-to increase the human capital stock in source...