The issue of whether unemployment benefits should increase or decrease over the unemployment spell is analyzed in a tractable model allowing moral hazard, adverse selection and hidden saving. Analytical results show that when the search productivity of unemployed is constant over the...

This paper provides a selective review of the theoretical literature on delegated portfolio management as a principal-agent relationship. The main focus of the paper is to review the analytical issues raised by the peculiar nature of the delegated portfolio management relationship within the...

In the education literature, it is generally acknowledged that both credit and insurance for students are rationed. In order to provide a rationale for these observations, we present a model with perfectly competitive banks and risk averse students who have private information on their ability...

Since August 1998, Russia has been suffering from a severe banking crisis. In finding a solution, two peculiarities of the Russian economy need to be taken into account: the substantial foreign liabilities of commercial banks and the failure of the government to service its liabilities. Apart...

We examine the coexistence of banks and financial markets, studying a credit market where the qualities of investment projects are not observable and the investment decisions of entrepreneurs are not contractible. Standard banks can alleviate moral-hazard problems by securing a portion of a...

In many countries, lenders are not permitted to use information about past defaults after a specified period of time has elapsed. We model this provision and determine conditions under which it is optimal. We develop a model in which entrepreneurs must repeatedly seek external funds to finance a...

The paper is about the economically efficient design of financial transfers to the unemployed in a highly industrialized country. There have been quite a few contributions to this problem — for example by Beenstock/Brasse, Feldstein/ Altman, Grubel, Orzag/Snower — which are presented and...