This paper studies the effect of financial repression and contract enforcement on entrepreneurship and economic development. We construct and solve a general equilibrium model with heterogeneous agents, occupational choice and two Financial frictions: intermediation costs and financial contract...

This paper establishes the existence of a stationary equilibrium and a procedure to compute solutions to a class of dynamic general equilibrium models that are useful for studying entrepreneurship. The models have two important features. First, occupational choice (entrepreneur or worker) is...

We explain a puzzling contradiction: theory often predicts that higher inequality leads to higher taxation, yet empirical results are mixed. In our model agents with heterogeneous wealth vote for the level of tax and make occupational choices to be workers or entrepreneurs. The tax chosen by the...