Three features of the international exchange rate data that are widely known are: (a) a high correlation between bilateral nominal and real exchange rates; (b) real exchange rate movements are highly persistent; and (c) real exchange rates are highly volatile. This paper attempts a joint, albeit...

We analyze public investment in social infrastructure using a two-period model in which a government must intermediate all infrastructure investment. Voters choose a government from two alternative types, high quality and low quality. A high quality government obtains higher returns on...

Distortions in private investment due to credit frictions, and in public investment due to corruption and bureaucratic inefficiencies, have both been suggested as important factors in accounting for the cross-country per capita income distribution. We introduce two modifications to the standard...