The objective of this paper is to point out that dollarization may be used as a signaling device. To this end, we introduce into a standard monetary policy model two types of governments: good and bad. Information is asymmetric, the government type is uncertain and the policy of the bad...

We study division of labour, innovation, and economic growth in a world with indivisibilities. In order to increase the division of labour, more specialized, labour saving capital varieties must be invented, which can be done only subject to a minimum size requirement. Thus, the division of...