The received wisdom about investment in Zimbabwe is that foreign exchange shortages were the key constraint on private capital formation, and that uncertainty about political developments, price controls and government policy with respect to labor have also discouraged investment. A model of...

During the 1980s the potential instability of Zimbabwe's unsustainably high budget deficit was reduced by the smooth transfer of resources from the private to the public sector via the domestic financial system, which affected private demand for financial assets. Import, exchange and price...