When per capita income is low, increases in income inequality make macroeconomic cycles less severe. We present a model in which access to credit is based on earnings potential. If low as well as middle income individuals are credit constrained, increases in income inequality lead to smaller...

We develop an analytical framework where products go through a standard life cycle and product quality is driven by cumulative production experience. Production experience influences the nature of cross-country outsourcing activity, and hence, the contents of trade. Multinational enterprises...