How does technological progress in financial intermediation affect the economy? To address this questiona costly-state verification framework is embedded into a standard growth model. In particular, financialintermediaries can invest resources to monitor the returns earned by firms. The...

We examine the interaction between foreign aid and binding borrowing constraint for arecipient country. We also analyze how these two instruments affect economic growth vianon-linear relationships. First of all, we develop a two-country, two-period trade-theoreticmodel to develop testable...

How important is financial development for economic development? A costly state verification modelof financial intermediation is presented to address this question. The model is calibrated to match factsabout the U.S. economy, such as intermediation spreads and the firm-size distribution for the...

The distribution dynamics of incomes across Indian states are examined us-ing the entire income distribution rather than using standard regression ap-proaches.The period 1965 to 1997 exhibits twin-peaked dynamics: there aretwo income convergence clubs at 50% and 125% of the national...

In an inuential article Tornell and Lane (1999) considered an economy populatedby multiple powerful groups in which property rights in the formal sectorof production are not protected. They obtained conditions under which thegroups appropriate output from the formal sector in order to invest it...

This paper extends and modifies the Keynesian critique of inflation targetingwith reference to stabilisation policy in emerging market economies. The IMF‘basic monetary programming framework’ for developing countries usesgovernment borrowing and the exchange rate as policy instruments in...

In the early 1990s, a consensus emerged among the leading experts in the field of small and micro business finance. It is based on three elements: The focus of projects should be on improving the entire financial sector of a given developing country; a commercial approach should be adopted,...

In light of the recent financial crises in the emerging markets, the coming-into-force of the financial services agreement under the GATS has been considered a success. While the agreement provides forlittle new liberalization but rather formalizes the status quo, it was feared that governments...

Zugang zu Krediten ist für kleine und mittelgroße Unternehmen in Entwicklungsländern von großer Bedeutung, um ihre ökonomischen Möglichkeiten besser auszuschöpfen und so die Einkommen ihrer Besitzer, aber auch ihrer Mitarbeiter zu erhöhen. Deshalb hat die Entwicklungshilfe in der...

The paper is a follow-up to an article published in Technique Financière etDeveloppement in 2000 (see the appendix to the hardcopy version), which portrayedthe first results of a new strategy in the field of development finance implemented inSouth-East Europe. This strategy consists in creating...