This paper examines the impact of transaction costs on economic welfare and development. We extend the static model of Romer (1994), in which transaction costs reduce welfare by the reducing the equilibrium number of intermediate goods, and estimate the welfare losses in the case of domestic...

Abstract This paper investigates the relationship between information technology and the capital markets. The central analytical and policy question addressed here is what kind of financial system or capital market arrangements are most conducive to fostering information technology and its use...