This paper studies the relation between Bayesian mechanism design and the Ramsey-Boiteux approach to the provision and pricing of excludable public goods. For a large economy with private information about individual preferences, the two approaches are shown to be equivalent if and only if, in...

The paper discusses the role of banks and markets in the allocation of risks in an economy. Starting from a discussion of risk allocation in the Arrow-Debreu model, it criticizes the view that banks and markets are substitutes. Instead it is argued that markets are made by intermediaries and...

The paper extends Diamond's (1984) analysis of financial intermediation to allow for risk aversion of the intermediary. It shows that, as in the case of risk neutrality, the agency costs of external funds provided to an intermediary are relatively small if the intermediary is financing many...

The paper studies utilitarian welfare maximization in a model with an excludable public good where individual preferences are private information. If inequality aversion is large, optimal allocations involve the use of admission fees and exclusion to redistribute resources from people who...

The paper reviews the literature on the role of the financial system for corporate finance and control and takes stock of our understanding of the issues. Topics covered include the information efficiency of organized markets, the significance of information efficiency for corporate control, the...

The paper puts forward the proposition that large corporations should be treated as financial institutions in their own right, as they use available earning from some activities to finance others, including new developments. With this view, it is suggested that the role of the financial system...

The paper discusses the respective roles of competition policy and sector-specific regulation for industries such as telecommunications, electricity, and gas, in which network infrastructures that are natural monopolies serve as essential facilities for anybody who wants to provide services in...

This contribution to the Festschrift for the Centenary of the Swiss National Bank discusses the prospects for monetary stability and financial stability after the creation of the European Monetary Union. Topics covered include the robustness of institutional arrangements and their implications...

This paper studies the impact of wage growth on the evolution of employment in an intertemporal general-equilibrium model with endogenous productivity growth. For real wage growth above laissez-faire levels, we obtain steady-state equilibria in which productivity grows at the same rate as wages,...