We examine whether credit contributes to business cycle fluctuations by dirctly affecting consumption rather than through the new well understood investment channel.

This paper characterises the dynamic behaviour of a growing economy where individuals `keep up with the Joneses` and face uninsurable labour income risk. Idiosyncratic uncertainty about future labour income reduces the marginal propensity to consume out of financial wealth and raises the...

Economies are so high dimensional and non-constant that many features of models cannot be derived by prior reasoning, intrinsically involving empirical discovery and requiring theory evaluation.  Despite important differences, discovery and evaluation in economics are similar to those of...

This paper characterises the dynamic behaviour of a growing economy where individuals keep up with the Joneses' and face uninsurable labour income risk. Idiosyncratic uncertainty about future labour income reduces the marginal propensity to consume out of financial wealth and raises the...

Whether they are financial, economic, or psychological, discount rates affect most economic decisions: investment and savings, hirings and firings, defaults and refinancing, financial and economic reforms, learning and experimentation, and any other decision with long-term consequences, such as...

Microfounded macromodels (SDGE models) represent the dominant approach in academic macroeconomics, and their influence now extends to the forecasting models of central banks.  These models appear to adopt a clear methodological approach, which promotes internal consistency above external...

In the past 30 years, microfinance has carried many promises of social and economic transformation, with the shift towards targeting women being seen as a major strategic move through which the promise of social development could be most effectively delivered.  However, ethnographic studies...

This paper studies how capital-scarce countries should manage volatile resource income.  Existing literature recommends that capital-scarce countries invest domestically, but that volatile resource income should be saved in a foreign sovereign wealth fund.  I reconcile these by combining a...

A generalized version of the capital management problem posed in a classic paper by R.H. Strotz is analyzed for the case of the naive planner who fails to anticipate any impending change in his own preferences. By imposing progressively stronger restrictions on the primitive of the problem -...

Households in developing countries use a variety of informal mechanisms to cope with risk, including mutual support and risk-sharing. These mechanisms cannot avoid that they remain vulnerable to shocks. Public programs in the form of food aid distribution and food-for-work programs are meant to...