Incomplete information creates matching friction that interferes with the ability of prices to allocate scarce resources across countries but can be overcome by international information--sharing networks. When the difference between country factor--endowment ratios is large relative to network...

This paper studies the effect of foreign aid on economic stabilization. Following Alberto Alesina and Allan Drazen (1991), the authors model the delay in stabilizing as the result of a distributional struggle. Since the delay is used to signal each faction's strength, the effect of the transfer...