This article surveys the macroeconomic implications of financial frictions. Financial frictions
lead to persistence and when combined with illiquidity to non-linear amplification effects …

Numerous studies regress log earnings on schooling and report estimated coefficients as
“Mincer rates of return”. A more recent literature uses instrumental variables. This chapter …

Economics has much to do with incentives--not least, incentives to work hard, to produce
quality products, to study, to invest, and to save. Although Adam Smith amply confirmed this …

We present a qualitative and quantitative analysis of the standard growth model modified to
include precautionary saving motives and liquidity constraints. We address the impact on the …

We study mechanism design in dynamic quasilinear environments where private information
arrives over time and decisions are made over multiple periods. We make three …

In every society for which we have data, people's educational achievement is positively
correlated with their parents' education or with other indicators of their parents' socio …

Much of macroeconomics is concerned with the allocation of physical capital, human capital,
and labor over time and across people. The decisions on savings, education, and labor …

The permanent income hypothesis implies that, for any cohort of people born at the same
time, inequality in both consumption and income should grow with age. We investigate this …

We develop a theory of general equilibrium with endogenous debt limits in the form of
individual rationality constraints similar to those in the dynamic consistency literature. If an …

This paper describes a new continuous-time principal-agent model, in which the output is a
diffusion process with drift determined by the agent's unobserved effort. The risk-averse …