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We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indi¤erent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By(More)
This paper uses a general equilibrium trade framework to estimate the contribution of transport infrastructure to regional development. I apply the analysis to India, a country with a notoriously weak and congested transportation infrastructure. I first analyze the development effects of a recent Indian highway project that improved connections between the(More)
Is China's rapid growth sustainable with the current institutions? Will the institution change if the growth slows down? To answer these questions, this paper proposes a theory of politico-economic transition, as follows. In oligarchy, a political elite extracts surplus from the state sector and taxes the private sector. However, to maintain the power, it(More)
This paper studies asymmetric responses in consumption where the asymmetries are endogenously generated by agents' preferences and incomplete knowledge about information quality. Agents form expectations about the future based on incomplete information which is assumed to be ambiguous and these future expectations, distorted by ambiguity, affect spending(More)
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In this paper we investigate wealth inequality/polarization properties related to the geometry of the support of the limit distribution of wealth in economies characterized by equal opportunities and uninsurable individual risk. We work out two simple successive generation models, one with stochastic human capital accumulation and one with R&D, and prove(More)
We provide a re-foundation of the symmetric growth equilibrium characterizing the research sector of all vertical R&D-driven growth models. This result does not rely on the usual assumption of a symmetric expectation on the future per-sector R&D expenditure. Indeed, with this structure of expectations, returns in R&D are equalized, and agents turn out to be(More)
This paper presents a standard endogenous growth framework in which the source of growth is represented by vertical innovation. The crucial assumption we introduce is that there is a positive information gap concerning the discovery of innovation. The aim of reducing the information dissemination lag provides incentives for firms to decide to merge their(More)
The main issue raised in this note is the nonequivalence between the infinite-horizon model where agents are infinitely lived and the successive generations model with altruistic finitely lived agents: in the presence of a nonnegative bequest requirement, endowment heterogeneity imposes a revision of the acritical adoption of the infinitely lived agent(More)