Corruption affects the composition of capital inflows in a way that may raise the likelihood of a currency crisis.Crony capitalism and international creditors' self-fulfilling expectations are often suggested as rival explanations for currency crises. A possible link between the two has not been...

The extent of corruption in a host country affects a foreign direct investor's choice of investing through a joint venture or through a wholly owned subsidiary. Corruption reduces inward foreign investment and shifts the ownership structure toward joint ventures.Smarzynska and Wei study the...

Is it true that bribery can alleviate red tape for enterprises? Not if bureaucrats can choose the regulatory burden and the red tape delay to extract bribes. The authors' empirical test finds that firms using bribes waste more management time dealing with bureaucrats. The business community can...

Other things being equal, countries with higher tax rates, more corruption, or more restrictions on capital account transactions attract less foreign investment. Taxes and capital controls hinder foreign investment, and bureaucratic corruption adds to those burdens rather than reducing them.In a...

This paper studies the impact of corruption in a host country on foreign investor's preference for a joint venture versus a wholly-owned subsidiary. A simple model highlights a basic trade-off in using local partners. On the one hand, corruption makes local bureaucracy less transparent and...

A rapidly expanding literature studies the effect of currency union and other exchange rate arrangements on goods market integration. All existing studies employ a methodology based on observed volumes of trade. However, from a theoretical point of view the connection between market integration...

The paper offers a new approach to estimate de facto exchange rate regimes, a synthesis of two techniques. One is a technique that the authors have used in the past to estimate implicit de facto weights when the hypothesis is a basket peg with little flexibility. The second is a technique used...

The 1997-99 financial crises in the emerging markets have brought to the foreground the concern about offshore investment funds and their possible role in exacerbating financial market volatility. Offshore investment funds are alleged to engage in trading behaviors that are different from their...

This paper develops a theory of international trade in which financial development and factor endowment jointly determine comparative advantage. We apply the financial contract model of Holmstrom and Tirole (1998) to the Heckscher-Ohlin-Samuelson model in which firms' dependence on external...

Does country transparency affect international portfolio investment? We examine this and related questions using some new measures of transparency and a unique micro dataset on international portfolio holdings. We distinguish between government and corporate transparency. There is clear evidence...