We propose an accounting framework that maps the dispersion of borrowing costs along the debt maturity structure to the misallocation of productive resources. Specif- ically, we decompose the effects of credit misallocation into two distinct channels: limited access to debt finance (scale...

This paper evaluates the desirability of PPP rules vis‐á‐vis fixed exchange rates both in terms of welfare and stability properties. The analysis is conducted within a small open‐economy New Keynesian framework extended to include a cost channel. In terms of stability, we find that while...

We document the presence of asymmetric business cycles in both regular and contract labour markets in India, investigate the role of nominal wage rigidities in accounting for these asymmetries, and study optimal inflation policy in such a milieu. Using data from Annual Survey of Industries, we...

Considerable attention has been devoted in the financial literature to excessive portfolio concentrations in domestic risky assets relative to those predicted by standard finance models – generally identified as “home bias” – across international markets. The innovation we offer is...

Considerable attention has been devoted in the financial literature to excessive portfolio concentrations in domestic risky assets relative to those predicted by standard finance models – generally identified as “home bias” – across international markets. The innovation we offer is...

The paper's point of departure is that the information content of financial asset prices is formed partly through search for private information by individuals or investor groups, rather than gleaned exclusively from observed asset prices. Differences in the efficiency of search for information...

By allowing for imperfectly informed markets and the role of private information, we offer new insights about observed deviations of portfolio concentrations in domestic relative to foreign risky assets, or "home bias", from what standard finance models predict. Our model ascribes the "bias" to...

By allowing for imperfectly informed markets but optimal private information acquisition, we offer new insights about observed variations in portfolio con- centrations in domestic versus foreign risky assets, or “home bias,” and the degree to which home asset prices are “information...

By allowing for imperfectly informed markets and the role of private information, we offer new insights about observed deviations of portfolio concentrations in domestic relative to foreign risky assets, or "home bias", from what standard finance models predict. Our model ascribes the "bias" to...