By financing new investments with debt, firms can use limited liability to credibly commit to defaulting earlier—allowing both firm owners and new creditors to benefit from diluting existing creditors.
We study the properties of eigenvalues and eigenvectors of the generator $T_{n,\epsilon,\phi}$ of the $\tau_{\epsilon,\phi}$ algebra.
We study how innovation and technology diffusion interact to endogenously determine the shape of the productivity distribution and generate aggregate growth.
We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country.
Will fast growing emerging economies sustain rapid growth rates until they "catch-up" to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally "fall-back" relative to the frontier? …
The least productive agents in an economy can be vital in generating growth by spurring technology diffusion. We develop an analytically tractable model in which growth is created as a positive externality from risk taking by firms at the bottom of …