Growth and heterogeneity: Theory and applications with many agent types

Chapter 1 proposes a dynamic general equilibrium theory which links growth, the distribution of income and the enforcement and violation of property rights which is shown to be consistent with long-run differences in per capita incomes. Economies in which the institutional structure does not adequately protect property rights grow slowly, or not at all, as the effective return to investment is low. The model posits a game between the government and workers which determines the extent of property rights protection. This game is imbedded into a standard intertemporal decision problem. Chapter 2 examines the effects that debt reduction in the U.S. will have on output, consumption and trade in a two-country overlapping generations model with productive capital, government debt, fiscal policies and international trade where agents in each country can live up to 60 periods. The third chapter introduces the mathematics of functional differential equations which arises in continuous time heterogeneous agent models. A survey of the applications in economics is provided including an optimal growth model with production lags which is shown to admit Hopf cycles