This paper endogenizes financial contagion and financial crises from financial institutions. We show that financial crises can emanate from financial institutions which generate soft-budget constraints (SBC). The prevailing SBC in an economy distort in-formation such that the interbank lending...

This paper centres around the question of ownership of firms and managerial competition and how these affect manager and employees' incentives to invest in human capital. We argue that employee's incentives in human capital investment are affected by both ownership and competition since both...

It is widely accepted that only the protection of private property rights and competition by rival firms provides adequate Incentive to perform for managers and employees. However, it is not entirely clear how ownership interacts with competition. This paper centers on the question of ownership...

This paper exploits a three-dimensional panel data set of prices on 27 traded goods, over 88 quarters, across 96 cities in the U.S. and Japan. We present evidence that the distribution of intra-national real exchange rates is substantially less volatile and on average closer to zero, than the...

This paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity, and inequality of income distribution. The model with transaction costs and...

This paper explores some of the central debates in the application of political economy to development policy making. It is particularly concerned with the connection between theory, empirical observation, and the practice of policy decision making. It explores distinct traditions of political...

What is the effect of factor mobility on income convergence? Why are population flows so persistent? Extending the neoclassical growth model to allow for mobile labor, in a long run steady state, individuals and firms receive equal levels of utility and profits across localities. But frictions...

This paper examines the links between demographic change and economic growth in Asia during 1965-90. We show that the overall rate of population growth had little effect on economic growth, but that changes in life expectancy, age structure, and population density have had a significant impact...

In the paper we introduce technological comparative advantage and transaction costs into the Heckscher-Olin (HO) model and refine the HO theorem, the Stolper-Samuelson theorem, the Rybczynski theorem, and factor equalization theorem. The refined core theorems can be used to accommodate recent...

The paper introduces differences in production and transaction conditions between countries into the model of monopolistic competition to investigate the interplay between trade policies and development strategies. It applies inframarginal analysis, which is total benefit analysis between corner...