important interaction between entry and investment, as the two can be used for consumption smoothing. Entry dampens the volatility of investment and helps the model to have a better fit for the second moments of all aggregate variables. Regarding prices, the model delivers a negative correlation...

We study the effect of financial shocks in labor market dynamics. We build a model with two types of labor, two types of capital and both search and financial frictions. We find that financial shocks, modeled as exogenous disturbances to the borrowing constraint of firms, can generate realistic...

Spanish Abstract:</B> Con base en el universo de emisores del mercado de renta variable en Colombia se construye un índice de precios, retornos y dividendos para el período 1995- 2017. La serie de retornos totales del mercado accionario, que muestra un promedio histórico de 19.07% (0.60 en...

Many emerging economies have regulatory limits on foreign exchange rates net open positions of banks. We show that such limits leave the capital adequacy ratios of banks with investments in foreign subsidiaries more exposed to exchange rate fluctuations. We discuss alternative policies for...

The run up to the euro currency initiated a period of capital inflows into southern European countries, i.e., Spain, Portugal, Italy and Greece. We document that those countries, and only them among OECD countries, concomitantly experienced a decline in the quality of their institutions. We...

This paper analyzes, both theoretically and empirically, the link between capital inflows and the quality of economic institutions. To this purpose, we construct a small-open economy model of the “soft budget constraint” syndrome wherein persistently cheap funding from abroad (i) raises the...