My dissertation examines the magnitude of switching costs for bank-dependent borrowers, their relationship to macro- nancial variables and their impacts on the effect of monetary policy. I also investigate the implication of bank entry and bank product differentiation on social welfare.The first...

Since commercial banks play important roles in the financial markets, it isimportant to evaluate whether banks operate efficiently. Moreover, given increasedcompetition from non-bank financial institutions, commercial banks should operatemore efficiently than they did previously. Commercial...

We present a simple model that can account for the main features of recent financial crises in emerging markets. The international illiquidity of the domestic financial system is at the center of the problem. Illiquid banks are a necessary and a sufficient condition for financial crises to...

A country's financial system is internationally illiquid if its potential short-term obligations in foreign currency exceed the amount of foreign currency it can have access to in short notice. This condition may be necessary and sufficient for financial crises and/or exchange rate collapses...

This article first reviews methods of foreign exchange intervention and then presents evidence - focusing on survey results - on the mechanics of such intervention. Types of intervention, instruments, timing, amounts, motivation, secrecy and perceptions of efficacy are discussed.

A traditional function of the central bank is to control the price level. The fiscal theory of the price level challenges this assumption, arguing instead that the fiscal authority's budgetary policy is the primary determinant of the price level. The authors provide a critical review of the...

The paper examines the greater use in the past decade of money market instruments in the conduct of monetary policy by the central banks, or their equivalent, in six of the main East Asian developing economies. Some of these economies have been successful in using various money market...

Central banks around the world potentially face a skeptical public when they announce a commitment to controlling inflation. Some economists have argued that, to enhance credibility, central banks should adopt monetary growth rules or other institutional arrangements. Yet it appears there are no...

After two decades of successfully restoring price stability in much of the world economy, central banks begin the next millennium facing a new set of challenges. One key task is how to conduct monetary policy in an era of price stability. Clearly, policymakers would like inflation to remain...