GMU econ PhD student, liberal, aspie, bi. I post interesting papers. Michael Kremer stan. I ❤️ optimal auction design. Spend more on drugs. Open borders now!
I should be clear about the terms. The interest rate is simply what the rate we need to be paid in order to defer consumption. If interest rates are 6%, then I am indifferent between $100 and $106 in a year. (We will abstract away from risk-aversion here)
The “stationary bandit” view of the state derives from Mancur Olson. In the state of anarchy, some people are bandits who profit by stealing from others. This theft prevents people from increasing output, though. It is profitable for the bandit to settle down and impose taxes.
India’s infrastructure, before the railroad construction campaigns began, was extremely poor. Transport was main through putting packs on the back of cattle, and driving them through fields, which was incredibly expensive. Railroads were both much cheaper, and much faster.
Recall that, in the Solow model, output is a function of labor and capital, with it converging to a steady state. Technological progress is represented by an A multiplying the function. Capital has decreasing marginal returns.
Its predecessor is the Harrod-Domar model, which is essentially a port of short-run Keynesian economics into long run growth. It assumes that factors of production are not substitutable, which gives it an unpleasant “knife-edge” characteristic.
I am not discussing it so much for the empirical results as for the methods, but it follows in the footsteps of Krugman (1981) and Brander and Krugman. If you allow for frictions, trade will create winners and losers. How big are these?
They are able to find the productivity effects easily, because that’s input/output, and they have sufficiently detailed data to measure that. They then turn to whether this is passed through to wages, and estimate a very precise null.
People in the same role differ in productivity. Pay transparency makes it much harder to pay more productive workers more, because you will need to give a formal promotion. 
Sweden was, by that point, still very much living off the dividends of past laissez-faire. Not until the neoliberal reforms of the early 90s would Sweden resume its prior growth. 
Why was this? Why did class reassert itself, with the same people back on top? And what does this tell us about *why* income inequality occurs? The reason cannot be wealth alone; and neither can it be formal education? So why does it happen? 
