This paper analyzes the role of the structure of skills in economic development through investment in human capital. With a lack of cresit market for education and the presence of indivisibilities in investment in human capital as well as of congestion in the educational system, the initial...

We consider a two-period overlapping generations model in which individual voters differ not only according to age but also productivity. In such a setting, a (redistributive) Pay-As-You-Go system is politically sustainable, even when the interest rate is larger than the rate of population growth .

It is generally accepted that moving from an unfunded to a funded social security system implies a welfare loss for the trasition generation, that is the generation that has to pay twice: first, saving for this own retirement and second, contributing to the pensions of the then retired...

In a dynamic general equilibrium setup, this paper highlights the role of vintages and creative destruction in business fluctuations. By stressing the forward-looking characteristic of the optimal scrapping rule, we use a standard rational expectations argument to show the constancy of the...