The assumption of perfect capital markets is least likely to be satisfied for the class of firms which devote resources towards the development of innovative products or processes. Existing tests of the impact of capital market imperfections on innovative firms cannot distinguish between two...

This paper studies the role of dynamic risk sharing in a world where agents have private information about their incomes, and in which their storage activities can be monitored at a cost. A principal offers long-term, full-commitment contracts to the agents, promising them consumption smoothing...

This paper studies the role of money as a medium of exchange when barter trade is restricted not only by the double-coincidence-of-wants requirement but also by private information about the quality of commodities. For this purpose, the model of N. Kiyotaki and R. Wright (1989) is extended to...