This paper analyzes the effects of transitory productivity shocks on long-run output. The study demonstrates that, despite it transitory nature, an adverse productivity shock may result in lower long-run output. A fall in productivity reduces output and savings and, consequently, the interest...

This paper analyses the interaction between the distribution of human capital, technological progress, and economic growth. It demonstrates the significant role of the distribution of human capital in the process of economic development. The evolutionary pattern of the human capital...

This paper analyzes the relationship between technological progress, wage inequality, intergenerational earnings mobility, and economic growth. In periods of major technological inventions, a decline in the relative importance of initial conditions raises inequality, enhances mobility, and...

This paper analyses the relationship between technological progress, intergenerational earnings mobility, and economic growth. The analysis demonstrates that the interplay between technological progress and two components that determine individual earnings – parental human capital and...

This study develops a general equilibrium model in which the evolution of income inequality and output conforms with the Kuznets hypothesis. The paper presents a novel endogenous mechanism that generates the inverted-U relation between income inequality and per capita output, and captures the...

This Paper analyses the effect of terror on the economy. Terror endangers life such that the value of the future relative to the present is reduced. Hence, due to a rise in terror activity, investment goes down, and in the long run income and consumption go down as well. Governments can offset...

This paper examines the distribution of output around capacity when money demand is a non-linear function of the nominal interest rate such that nominal interest rates cannot become negative. When fluctuations in output result primarily from disturbances to the money market, the variance of...

Economists have long viewed recessions as contributing to increasing inequality. However, this conclusion is largely based on data from a period in which inequality was increasing over time. This paper examines the connection between long-run trends and cyclical variation in earnings inequality....