A large literature explores the importance of entrepreneurship as the catalyst of economic progress. In contrast, this paper argues that entrepreneurs are the driver of economic stagnation. We analyze the non-productive entrepreneurial process and discuss three channels through which non-productive activities have a multiplier effect culminating in economic decline and stagnation. Drawing on ex...

This article offers a theory of economic growth, stagnation, and demo-economic transition that originates from external effects of childbearing, health expenditure, and education under endogenous mortality. Facing a hierarchy of needs, parents always consume and want to have a family. Child quality, measured as a two-dimensional vector of child health and schooling, becomes only affordable when...

T he recent Japanese economic experience has been dismal. Growth has collapsed, deflation has taken hold and the financial system is in shambles. We begin our story by documenting the macroeconomic troubles that appear to have triggered the collapse of Japan’s financial sector. We argue, however, that the macroeconomic factors alone are not likely to explain the full extent of the problems in t...