ABSTRACT This paper proposes a novel non‐parametric strategy to test ‘Piketty's third law,' postulating that positive gap between the rate of return on capital () and economy's growth is associated with increased income inequality. The based decomposition inequality changes over time allows investigating existence distributive effect its relative importance respect other drivers time. Applying this data from Panel Study Income Dynamics last 50 years, we find support for Piketty's law in...

Abstract Credible implementation of climate change policy, consistent with the 2 °C limit, requires a large proportion current fossil‐fuel reserves to remain unused. This issue, named Carbon Bubble, is usually presented as required asset write‐off, implications for investors. We embed Bubble in macroeconomic model exhibiting financial accelerator: if investors are leveraged, then might precipitate fire‐sale assets across economy, and generate persistent fall output investment, impairing...

Abstract Accounting for endogeneity, unobserved heterogeneity, and sample selection in an unified framework, we investigate the effect of psychological well-being on wages labour market participation using a panel from British Household Panel Survey. We find outcomes to differ across gender. In particular, distress significantly reduces genders, but, conditional participation, has significant negative hourly only female sample.

We present a two-area endogenous growth model where abstract knowledge flows at no cost across space but tacit arises from the interaction among researchers and is hampered by distance. Digital communication reduces this "cost of distance" reinforces productive specialization, leading to an increase in system-wide rate more inequality within areas. These results are consistent with evidences on rise concentration innovative activities, income inequality, skills divergence US urban

Access to finance is a major barrier clean innovation. We incorporate financial sector in directed technological change model, where research firms working on different technologies raise funding from intermediaries at potentially costs. show that, addition rising carbon tax and generous but short-lived subsidy, optimal climate policies include subsidy directly aimed reducing the financing cost differential across technologies. The presence of an endogenous experience effect induces stronger...

Abstract Is there any such thing as too much capital when it comes to the financing of innovative projects? We study a principal–agent model in which principal chooses scale experiment, and agent privately observes outcome realizations can choose novelty project. When has private access safe but non‐innovative project, starves funds incentivize risk‐taking. The quickly scales up after early successes, tolerate failures. If is equally informed about outcome, then well‐resourced, resembling...

Access to finance is a major barrier clean innovation. We incorporate heterogeneous and endogenous financing costs in directed technical change model identify optimal climate mitigation policies. The presence of experience effect pushes the policymaker strengthen policies short-term, both shift innovation production towards sectors reduce cost differential across technologies, which further facilitates transition. policy mix between carbon taxes research subsidies depends on drivers effect....

Abstract I investigate whether wealth inequality hinders the discovery of novel technologies in a competitive screening model. Agents can engage exploration, which may lead to superior technologies, but it is likely waste time with inferior ones. Talented agents are better at weeding out talent unobservable by lenders. When poor, this causes an adverse selection problem whereby exploration pursued untalented rather than talented As economies become wealthier, misallocation weakens. Higher...

Abstract We present a two‐area endogenous growth model where abstract knowledge flows at no cost across space but tacit arises from the interaction among researchers and is hampered by distance. Digital communication reduces this “cost of distance” reinforces productive specialization, leading to an increase in system‐wide rate more inequality within areas. These results are consistent with evidences on rise concentration innovative activities, income inequality, skills divergence US urban

I investigate whether wealth inequality hinders the discovery of novel alternatives in a competitive screening model. Agents can engage experimentation, which may lead to superior technologies, while wasting time with inferior ones. Talented agents are better at weeding out actions, but talent is unobservable by lenders. When poor, this causes an adverse selection problem and experimentation also pursued untalented agents. As economies become wealthier, misallocation weakens. Higher worsens...

In the post-pandemic world, digital communication will be integral part of daily working to a higher extent than before, with disproportionally strong impact on knowledge-based activities, like innovation and research. We present multi-area endogenous growth model where abstract knowledge flows at no cost across space but tacit arises from interaction between researchers hence is hampered by distance. Digital reduces this "cost distance" for reinforces productive specialization. This...