This paper presents a simple model to analyse how moral hazard resulting from information asymmetries in financial markets affects growth in financially open developing countries. We find that if domestic entrepreneurs can gamble with foreign creditors’ money, borrowing under standard debt...

This paper analyses the information content of monetary aggregates for inflation in Chile. In particular, we adopt the P* framework that separates the effect of an estimated money overhang from those of the output gap. We use two variants of the model, the original Hallman et al (1991), and...

We estimate a cointegrated VAR of consumption, household money and their determinants in Chile.We find two long-run relations that can be specified as a classic money-demand equation and aconsumption equation that is homogenous in disposable income. We find that the household money overhang has...