The theme of this year's WDR is how to structure institutions to bring about an effectively functioning market economy. There is no question that political institutions play a key role here. In most countries political institutions determine the rules of access to considerable discretionary...

This paper is a revised version of an Economic History thesis submitted to the London School of Economics in September 2000.The main text assumes analytical rather than chronological form, and, to avoid breaking the flow of the argument, it refers to persons, Labour Party structures and...

Large companies are usually organized into business units, yet some activitiesare almost always centralized in a company-wide functional unit. We firstshow that organizations endogenously create an incentive conflict between functionalmanagers (who desire excessive standardization) and...

Market participants' risk attitudes, wealth and portfolio composition influence their positions in apegged foreign currency and, therefore, may have important effects on the sustainability of currencypegs. We analyze such effects in a global game model of currency crises with continuous...

This paper studies a dynamic model of crises with timing frictions that combines the mainaspects of Morris and Shin (1998) and Frankel and Pauzner (2000). The usual arguments forexistence and uniqueness of equilibrium cannot be applied. It is shown that the model has aunique equilibrium within...

[...]What might account for this link between parentalincome and children’s income? Many economists believethat this relationship is due in large part to differentialhuman-capital investment between high-income andlow-income families. High-income parents can invest inmore (and better)...

This paper describes a new and intuitive methodfor answering these technical questions by tabulating theexact loss distribution arising from correlated credit eventsfor any arbitrary portfolio of counterparty exposures, downto the individual contract level, with the losses measuredon a...

[...]This study is the first formal investigation ofconsumer attitudes that compares the forecasting power ofthe University of Michigan’s Index of Consumer Sentimentand the Conference Board’s Consumer Confidence Index.We begin with a background analysis of structural differencesbetween the...

[...]In this article, we shed light on the globalizationof international production and trade by demonstratingthe increasingly important role vertical specializationplays in international trade. We use case studies andinput-output tables to calculate the level and growth...