We examine the trade-offs associated with the move to dollarization from the perspective of the stability of the banking system in a small open economy. Central bank policy suffers from time-inconsistency when facing a banking crisis: A bailout is optimal ex post but ex ante it should be limited...

We investigate the dynamics of prices, information and expectations in a competitive, noisy, dynamic asset pricing equilibrium model. We look at the bias of prices as estimators of fundamental value in relation to traders' average expectations and note that prices are more (less) biased than...

We investigate the dynamic of prices, information and expectations in a competitive, noisy, dynamic asset pricing equilibrium model. We look at the bias of prices as estimators of fundamental value in relation to traders' average expectations and note that prices are more (less) biased than...

This article reviews the main issues of regulating and supervising banks in emerging markets with a view toward evaluating the long-run options. Particular attention is paid to Latin America and East Asia. These economies face a severe policy commitment problem that leads to excessive bailouts...

This article argues that present financial regulatory arrangements within the European Monetary Union are not adequate either to preserve stability or to foster financial integration. Reform of financial regulation should concentrate on establishing clear procedures for crisis lending and...

The authors study a general implementation problem for exchange economies with a continuum of players and private information, and test the robustness of the results for sequences of approximating finite economies. Assuming that the designer knows the distribution of the characteristics in the...