We recommend a Bretton Woods system along structural lines. A key component of the case is the substitution of the money transmission mechanism by the credit transmission mechanism. We suggest that the real exchange rate be the variable of cooperation between countries that are free to set...

We offer an explanation, drawn from first principles, of the belief that the consumption needs of the asset-poor are best met by debt contracts, whereas equity arrangements are tailored to the financing requirements of poor entrepreneurs.

We show that the interest rate cannot both coordinate the savings plans of borrowers and lenders and equal the marginal product of capital.