Growing experience with decentralization indicates that a country's public finance system suffers when subnational governments expose themselves to excessive risk. But central governments often lack the information needed to monitor the fiscal risks of subnational governments. Several countries,...

The economic policy note discusses the issue of serious fiscal instability faced by many governments as a result of their contingent liabilities, which are associated with major hidden fiscal risks. Direct liabilities are predictable obligations that will arise in any event, and are the main...

We develop a dynamic model of a BHC that encompasses both a trading desk and a loan desk, and explore the role of risk attitude and overleveraging by the trading desk. We trace the impact of monetary policy and market innovations on bank behavior in the presence of Basel III type regulations. We...