This paper provides a political-economy explanation for the separation of monetary policy from banking supervision by examining whether this institutional arrangement serves the platforms of the Conservative or of the Liberal parties, which are assumed to favor a stable price level and...

The economic theory of defense has traditionally described public safety as achieved through investments that deter adversaries. Deterrence is, however, ineffective and pre-emptive defense is required when a population of intended victims confronts supreme-value suicide terror. A moral dilemma...

The economic theory of defense has traditionally described public safety as achieved through investments that deter adversaries. Deterrence is however ineffective, and preemptive defense is required, when a population of intended victims confronts supreme-value suicide terror. A moral dilemma...

If banks face asymmetric information about loan quality, endogenous borrowing constraints which restrict the size of new firms may emerge in equilibrium. High quality firms reduce financing costs by starting off small and increasing their size over time.