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...

The paper's point of departure is that the information content of financial asset prices is formed partly through search for private information by individuals or investor groups, rather than gleaned exclusively from observed asset prices. Differences in the efficiency of search for information...

Deviating from conventional models in financial economics which maintain that markets are perfectly informed, more recent work has relied on the role of private information to explain observed portfolio choices or their impact on market outcomes in financial and currency markets (see, e.g.,...