Because of transportation costs, African manufacturing firms benefit from some market power on their domestic market, where they can charge a higher price than the export price, net of transportation cost. We present a simple theoretical model of an exporting firm that discriminates between the...

This paper argues that ethnic problems are only one aspect of political violence in Africa, while violent conflicts must be thought about as a failure of the state to perform some of its fundamental tasks. State formation in Africa is a transition process starting from an institutional endowment...

If foreign aid undermines institutional development, aid recipients can exhibit the symptoms of “dependence”-a short-run benefit from aid, but increasing need for aid that is damaging in the long run. We show that this high-aid/weakinstitutions state can be an equilibrium outcome even when...

The relationships between inflation and macro-economic instability are discussed analytically, using a simple monetary model with rational expectations, with an application to the case of Madagascar. The recent macroeconomic history of this country suggests that high inflation is correlated with...