This paper shows that real exchange rate undervaluation through the accumulation of foreign reserves may improve welfare in economies with learning-by-investing externalities that arise disproportionately from the tradable sector. In the presence of targeting problems or when policy choices are...

We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand....

Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However,...

This paper provides an introduction to the new economics of prudential capital controls in emerging economies. This literature is based on the notion that there are externalities associated with financial crises because individual market participants do not internalize their contribution to...

Economics and ethics both offer important perspectives on our society, but they do so from two different viewpoints - the central focus of economics is how the price system in our economy values resources; the central focus of ethics is the moral evaluation of actions in our society. The rise of...

Large language models (LLMs) have seen remarkable progress in speed, cost efficiency, accuracy, and the capacity to process larger amounts of text over the past year. This article is a practical guide to update economists on how to use these advancements in their research. The main innovations...