The empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions. Which factors may induce a de facto peg? Why do countries enforce a peg but do not announce it? Why do countries \break their promises"? We show that a stable socio-political...

We revisit the empirical relationship between output volatility and government expenditure in a model where the two are jointly deter- mined. The key regressors in our model are trade and ¯nancial integra- tion indicators, institutional variables, including central bank indepen- dence, and a...

Economists have largely neglected the analysis of the relevant factors that induce policymakers and trade unions to sign social pacts, despite their clear implications for economic policies and the functioning of labour markets. In this paper we fill this gap. We build a simple theoretical...

We present an empirical model where output growth volatility and government expenditure are jointly endogenous and both are affected by policies and institutions. We ¯nd that output volatility increases government expenditure, but higher expenditure, causes greater out-put volatility. This...

This paper investigates the investment behaviour of a large panel of Hungarian firms during the transition period (1989-1999). We examine the role of financial factors and assess whether financial reforms have succeeded in increasing the efficiency of credit allocation. We find that reforms have...