This paper presents an extension of the two-period Samaritan's Dilemma in order to analyze the potential for foreign aid to promote freedom. An example is the United States' recent opening towards Cuba. It is shown that a donor nation's dual concern for economic reforms and greater freedoms can...

This paper examines the ability of financial markets to resolve the institutional insufficiency that underlies the credibility problem. We derive necessary conditions for policy credibility in a Barro-Gordon (1983) model where 'market-makers' attempt to earn financial profits from speculation...