In this paper we will seek to provide a political economy explanation for the government issuance of indexed bonds. We will show that the issuance of nominal bonds decreases inflation whenever the bondholders' constituency is stronger than the taxpayers' constituency. We then assume that public...

Why do dynamic inconsistencies in monetary policy exist? In this paper we present a traditional model with output inefficiencies, but we allow for monetary policy to be influenced by the various constituencies in the economy, that pressure the Congress to in turn pressure the central bank to...

This paper discusses several determinants of the differential between yields on Italian government securities and yields on foreign government securities. We concentrate on expectations of (at least partial) insolvency, tax factors and exchange rate expectations. The evidence suggests that most...

This article provides original evidence on the use of derivatives by sovereign borrowers. Swaps are used both to increase the liquidity of long-term government bonds and for speculation. However, some sovereign borrowers have also used derivatives to "window dress" their public accounts for the...

This paper analyzes the existing relation between corruption and economic growth andexamines the possible outcome of a reform implemented by the State to weed out or reducecorruption. It will be stressed that the reform against corruption tends, if not deemed bythe operators to last in time, to...

In this paper we take another look at the literature on central bank independence. We show that the representative-agent approach to monetary policy is seriously flawed and does not provide a sound basis for deriving institutional solutions to the inflationary-bias. We then argue that the...

Why do dynamic inconsistencies in monetary policy exist? In this paper, a traditional model with output inefficiencies is introduced, but monetary policy is allowed to be influenced by the various constituencies in the economy that pressure Congress in turn to pressure the Central Bank to adopt...

In this paper we try to construct an hypothesis as to why, as data seem to show, countries that adopt more "transparent procurement", as calculated by the share of tender advertised publicly, are also the ones where corruption is considered more pervasive. We describe an economy where in...