In the past three decades the stock of assets and liabilities of developingcountries measured as a ratio of GDP has tripled. It is commonly believed that anincrease in opportunities for diversifying risk allows more consumption smoothing.However, the data show that volatility of consumption in...

Policymakers increasingly view short-term nominal interest rates as the main instrument of monetary policy, often in conjunction with some inflation target. Interest rates on short-term indexed government debt (i.e., a real interest rate) have also been used as policy instruments. To understand...

The central role of interest rates in the implementation of monetary policy has become more pronounced in recent years. Therefore, monetary policy should probably be viewed as including both the control of some monetary aggregate (money supply policy) and of some nominal interest rate (interest...

This paper constructs and analyzes an optimizing model of dual exchange markets which are incompletely separated owing to the presence of fraudulent cross transactions. The model is used to examine the implications of certain shocks, including devaluation. Devaluation first leads to the...

International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts, they normally pay IFIs in full. This paper presents a model where a creditor, such as an...

This paper analyses the impact of a minimum price variation (tick) and time priority on the quote dynamics and on trading costs when competition for the order flow is dynamic. It finds that convergence to competitive prices can take time and that the speed of convergence is influenced by the...