This paper investigates how initial inequality can causally affect economic growth when moral hazard problems exist in credit markets.Two regimes of the credit markets aiming at overcoming the moral hazard problems are analyzed.The formal one such as bank relies on intermediary between borrowers...

This paper analyses the effects of reducing unfunded social security and population ageing on economic growth and welfare, both for a small open economy and for a closed economy.The economy consists of a service sector and a commodity sector.Productivity growth only occurs in the latter sector...

A new line of theoretical and empirical literature emphasizes the pivotal role of fair institutions for growth.We present a model, a laboratory experiment, and a simple cross-country regression supporting this view.We model an economy with an unequal distribution of property rights, in which...

Newly established firms often try to secure their market position by building up a base of loyal customers. While recessions may not destroy technological leadership, they may be harmful for such firm-customer relationships. Without such customer bases, these firms find themselves more...

In this paper we develop a formal model of economic growth and two types of social capital. Following extant literature, we model social capital as participation in two types of social networks: first, closed networks of family and friends, and, second, open networks that bridge different...