I study the implications of the limited enforceability of credit contracts for inequality and economic growth. I introduce limited enforcement into a deterministic neoclassical growth model. Two types of agents differ in their initial wealth, ability and patience and each operate a private firm....

Conventional wisdom suggests that the optimal policy response to rising income inequality is greater redistribution via higher marginal tax rates and more progressive tax schedules. In this paper we study an economy in which trade is associated with a costly entry into the foreign market, so...