In a simple, forward looking linear stochastic model we investigate the impact of heterogeneity in expectations formation on the speed of convergence of the learning process of agents towards equilibrium. We …nd that even when heterogeneity does not a¤ect learnability in term of its...

We study the relationship between the underground economy and financial development in a model of tax evasion and bank intermediation. Agents with heterogenous skills seek loans in order to undertake risky investment projects. Asymmetric information between borrowers and lenders implies a menu...

Empirical observation suggests that not all countries of the world have suffered as a result of widespread corruption. Whilst many countries have undoubtedly been damaged considerably, others appear to have coped well - in some cases, very well - with the problem. The analysis that follows seeks...

The business cycle effects of bank capital regulatory regimes are examined in a New Keynesian model with credit market imperfections and a cost channel of monetary policy. A key feature of the model is that bank capital increases incentives for banks to monitor borrowers, thereby reducing the...