This paper revisits the question whether capital in a competitive equilibrium is overaccumulated from the perspective of the social planner in an incomplete market economy with risky human capital accumulation. As in Dávila, Hong, Krusell and RíosRull (2012), we consider a constrained social planner who cannot complete markets, but can improve welfare by only internalizing how individual alloca...

This paper investigates the returns to capital, productivity and capital accumulation using a unique panel dataset for Peruvian micro and small enterprises (MSEs). Our analysis integrates recent empirical approaches that have focused on the returns to capital in MSEs into a dynamic perspective. To this end, we first analyze patterns of capital returns to test whether we can confirm recent findi...

In this paper, I develop a new measure of human capital stock that has two advantages over previous measures. First, it allows for the fact that the cost of education varies across time, countries, and levels. Second, the unit of measurement is dollars, which allows comparison of human capital stocks with other macroeconomic variables, including national income (GDP) and physical capital stocks...

This paper takes a step toward defining a continuous time methodology to analyze a class of time inconsistent capital accumulation games when the discount rate is non-constant and commitment is not possible. The subgame perfect and history independent equilibrium consumption policies are characterized with an equation that must be satisfied by the value function. The equation is reminiscent of ...

I consider the implications of alternative bankruptcy regimes for student loans in a heterogeneous model of life-cycle earnings and risky human capital accumulation. Findings suggest that the ability level of high-school graduates drives the decision to enroll in college, while the initial human capital level is crucial for completing college. Also, the correlation between parental wealth and a...

We propose a novel, risk-based transmission mechanism for the effects of currency manipulation: policies that systematically induce a country’s currency to appreciate in bad times lower its risk premium in international markets and, as a result, lower the country’s risk-free interest rate and increase domestic capital accumulation and wages. Currency manipulations by large countries also have e...