We offer new cross-country evidence on the natural resource curse. We investigate the impact of the interaction of natural resource abundance and policies on growth. We find that the resource curse is less severe in countries with less restrictive trade policies and good institutions. However,...

In the presence of Walrasian labor markets social policies harm hours worked, employment and output. In non-Walrasian labor markets with trade unions, efficiency wages and/or costly search and mismatch progressive taxation and corporatism induce wage moderation and boost employment and output....

We criticize existing empirical results on the detrimental effects of natural resource dependence on the rate of economic growth after controlling for institutional quality, openness, and initial income. These results do not survive once we use instrumental variables techniques to correct for...

We document an empirical puzzle for EMS exchange rates during a period in which the bands on these exchanges rates were (almost) credible, i.e. exchange rate distributions are humpshaped rather than U-shaped as predicted by the standard target zone model. We offer an explanation of this puzzle...

Macroeconomic stabilisation and foreign exchange market interventions are inves-tigated within the context of a stochastic small open economy. With money demand shocks a peg is optimal, but with goods demand shocks a nominal income target is best. With supply shocks the optimal degree of...

A democratic society in which the distribution of wealth is unequal elects political parties that are likely to represent the interests of poor people. It is in the interests of the clientele of the resulting governments to attempt to levy inflation taxes in order to erode the real value of debt...