This paper offers the first comprehensive analysis of legal change in the protection of shareholder and creditor rights in transition economies and its impact on the propensity of firms to raise external finance. Following La Porta et al. (1998), the paper constructs an expanded set of legal...

The Grameen Bank’s lending has two distinctive features: villagers are held jointly liable for repayments and are asked to make reports about each other. We consider a model where villagers have an information advantage over the bank and can collude. We derive an efficient Grameen type...

Governments and aid agencies target transfers to the poor, but audits to deter the rich are costly. This paper analyzes how community information can reduce targeting costs. If each community is given a hard budget constraint, then targeting costs can be substantially reduced by asking...

The paper introduces differences in production and transaction conditions between countries into the model of monopolistic competition to investigate the interplay between trade policies and development strategies. It applies inframarginal analysis, which is total benefit analysis between corner...

This paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity, and inequality of income distribution. The model with transaction costs and...

A model of real exchange rate RER) determination is presented. The model permits long-run equilibrium movements in RER to be distinguished from its short-run disequilibrium dynamics. An important aspect of the model is that is explicitly considers the parallel market premium as one of the...

In the context of an empirical model, the authors examine the impact of capital flows, among other fundamentals, on long-term exchange rates in Chile. The real exchange rate and its fundamentals were found to be cointegrated during 1960-92. This cointegration allows a reinterpretation of...