This paper studies the effects of contracting institutions on economic development. A growth model is presented with endogenous incomplete markets, where financial frictions generated by the imperfect enforcement of contracts depend on the future growth of the economy, which determines the costs...

We study empirically if countries that default on their debt experience a reduction in their capital inflows as suggested by the literature. Our data contains information on (i) the defaulter countries and their creditors and (ii) bilateral foreign direct investment (FDI) flows. With this we can...

We study steady state optimal taxation in a context where firms differ in productivity and they decide whether to produce or not after comparing after-tax profits vis-à-vis an outside alternative option. The government taxes capital income, firms’ profits and labor income, but does not tax...

We analyze the IMF as a lender to countries in financial distress, highlighting the fact that it is a senior creditor. One advantage of delegating senior lending to a single institution rather than to competitive markets is that the former would be able to reach the socially optimal solution....

The last financial crisis revealed that financial imperfections and institutions play a more important role than the literature has assigned them for a long time, and it is possible to ascertain strongly that in the coming years macroeconomic research will be dominated by the study of the...

An objective of IMF-supported programs is to help countries improve their access to international capital markets. In this paper, we examine the issue whether IMF-supported programs influence the ability of developing country issuers to tap international bond markets and whether they improve...