The 1997 collapse of the Albanian economy caused by the collapse of economy-widePonzi schemes contrasts sharply to itssuccess status as a post-socialist transition country in the years 1992-1996. Inthis paper, an attempt is made to explain this'Albanian Paradox'. The specific Albanian conditions...

We analyze how the threat of a potential future regime shift affects optimal management. We use a simple general growth model to analyze four cases that involve combinations of stock collapse versus changes in system dynamics, and exogenous versus endogenous probabilities of regime shift. Prior...

This paper provides evidence that the choice of the foreign exchange regime is not of first order importance for achieving high output growth. It is argued that due to the forward looking nature of the foreign exchange market, exchange rate stability hinges on the current and anticipated...