Interconnections among financial institutions create potential channels for contagionand amplification of shocks to the financial system. Contagion occurs when a shock tothe assets of a single firm causes other firms to default through the network of obligations.We say that contagion is weak if...

Over the last decade Amartya`s Sen`s Capability Approach (CA) has emerged as the leading alternative to standard economic frameworks for thinking about poverty, inequality and human development generally. In countless articles and several books that tackle a range of economic, social and ethical...

A convergence model in which wealth accumulation is subject to i.i.d. random shocks is examined. The accumulation functions shows what k_{t+1} - wealth at t+1 - would be given k_t and with no shock. It has a positive slope, but its concavity or convexity is indeterminate. The focus is the...

Post-conflict situations face a high risk of reversion to conflict. We investigate the effect of military expenditure by the government during the first decade post-conflict on the risk of reversion. We contrast two theories as to the likely effects. In one, military spending deters conflict by...

A fundamental macroeconomic problem in Zimbabwe is that the sum of public-sector projects is greater than the resources available to finance them. The government`s difficulty in discerning the macroeconomic limitations on new initiatives was greatly increased by the unusual circumstances of the...

Drawing upon data from Ethiopia, we highlight the relationship between investments in child schooling and key factors related to household characteristics, supply and quality of schooling, and income shocks. The unique contribution of this study stems from our examination of the effect of...

This paper examines the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation. Recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate the returns to R&D, despite the strengthening of US...

South Africa’s unemployment rate is one of the highest in the world, and it has important distributional implications. The paper examines the incidence of unemployment using two national household surveys for the mid-1990s. Both entry to unemployment and the duration of unemployment are...

We infer unobserved strategies from the observed actions of buyers in posted-offer market experiments to evaluate their effectiveness against a monopolist. While the strategies of one-quarter of the buyers in our experiments correspond to the game-theoretic prediction of passive price-taking,...

This paper examines the (non) equivalance between aid flows and trade preferences as alternative forms of donor assistance in the presence of learning-by-doing externalities in recipient country export production. Using a two-period model based on vanWijnbergen (1985), in which the productivity...