We develop a stylized model of economic growth with bubbles. In this model, financial frictions leadto equilibrium dispersion in the rates of return to investment. During bubbly episodes, unproductiveinvestors demand bubbles while productive investors supply them. Because of this, bubbly...

The most striking difference in corporate-governance arrangements between rich andpoor countries is that the latter rely much more heavily on the dynastic family firm,where ownership and control are passed on from one generation to the other. We arguethat if the heir to the family firm has no...