The long-run price elasticity of demand for credit is a key parameter for intertemporal modeling, policy levers, and lending practice. We use randomized interest rates, offered across 80 regions by Mexico’s largest microlender, to identify a 29-month dollars-borrowed elasticity of -1.9. This...

The paper describes the insights which trade theory can provide into economic developments in Ireland during the 1930s. First, a version of Ronald Jones's "specific factors" model is applied to the period after 1932, when a policy which combined industrial tariff protection and controls on...

It is well known that in the Mundell-Fleming model capital mobility creates a channel through which permanent (transitory) shocks to aggregate demand such as fiscal and trade shocks are completely (partially) neutralized by the response of the real exchange rate. An important policy implication...

The paper starts from the premise that the debate on the ‘new architecture’ of the international financial system should be based on a theory that endogenizes the structure of countries' external liabilities. I present a model in which the maturity of a country's external sovereign debt is...

This paper surveys the performance of international capital markets and the literature on measuring international capital mobility. Three main functions of a globally integrated and efficient world capital market provide focal points for the analysis. First, asset-price arbitrage ensures that...

In an economy à la Diamond and Dybvig (1983), we present an example in which foreign lenders find it profitable to invest in an emerging market if, and only if, the emerging market government imposes taxes on short-term capital inflows. This implies that capital controls that are effective in...

This paper analyses, from a public-finance perspective, the theoretical underpinnings and the empirical relevance of the phenomenon of financial repression. The analysis explicitly accounts for the interaction between capital controls and financial repression. The proposed empirical estimate of...

One of the reasons for governments to use capital controls is to obtain some degree of monetary independence. This paper investigates the link between capital controls and interest differentials/ forward premia. This to test whether they can indeed give governments the power to drive exchange...

The paper discusses the process of financial liberalization in Greece and the impact it is likely to have on the conduct of monetary policy. To examine the effectiveness of exchange rate controls in Greece during periods of intense downward pressure on the drachma, we study the behaviour of...

This paper analyses the effects of monetary shocks in the determination of exchange rates in economies where banks play a central role in providing finance for domestic investment and in international capital transactions. This is a situation that prevails in many countries, both developed and...