We introduce agents'heterogeneity into a model of endogenous business cycles, in which agents can invest either in 'good'projects that contribute to future capital formation, or in 'bad' projects without that property. The resulting map involves three distinct regimes, two of which we linearize. Using theoretical results on piece-wise linear systems and on border collision bifurcations, we are able to provide a thourough analysis of the dynamics.

We introduce a banking sector and heterogeneous agents in the dynamic overlapping generations model of Matsuyama et al. (2016). Our model captures the benefits and costs of an advanced banking system. While it allocates resources to productive activities, it can also hinder progress if it invests in projects that do not contribute to capital formation, and potentially triggering instabilities due to the emergence of cycles. Our intergenerational dynamic framework enables us to show that income inequality between agents increases during recessions, confirming empirical observations. Moreover, we identify both changes in production factor prices and the reallocation of agents across occupations as driving factors behind the increased inequality.

This paper examines the effect on primary school pupils' education attainment of their school's conversion to "academy" status, a change in the schools' governance regime which increased their managerial autonomy. We use a panel switching regression model where the conversion decision is instrumented with the attitude towards conversion of the stakeholders in the school's administrative authority to account for the potential endogeneity of the conversion to academy status. We look beyond the average effect, and focus on the potential difference in effect for different children and different schools and as time passes. We find that conversion had at most limited effects on the pupils' attainment in the short term. Any improved attainment fades away as time passes, and is weaker or absent for more able children, and for those in schools with fewer advantaged pupils. JEL Numbers: I20, I28, H42