We propose an accounting framework that maps the dispersion of borrowing costs along the debt maturity structure to the misallocation of productive resources. Specif- ically, we decompose the effects of credit misallocation into two distinct channels: limited access to debt finance (scale...

This paper evaluates the desirability of PPP rules vis‐á‐vis fixed exchange rates both in terms of welfare and stability properties. The analysis is conducted within a small open‐economy New Keynesian framework extended to include a cost channel. In terms of stability, we find that while...

We document the presence of asymmetric business cycles in both regular and contract labour markets in India, investigate the role of nominal wage rigidities in accounting for these asymmetries, and study optimal inflation policy in such a milieu. Using data from Annual Survey of Industries, we...