Countries need suitable mechanisms for balancing the risks and benefits of financial openness, including mechanisms through which to provide insurance to citizens, through the marketplace or through redistributive policy, and thus to avert political pressure for capital controls. Capital...

Societies provide institutions that are costly to use, but able to enforce long-run relationships. We study the optimal decision problem of using self-governance for risk sharing or governance through enforcement provided by these institutions. Third-party enforcement is modelled as a costly...

Over the past decades, cross-border financial flows have increased in importance and have in many occasions exceeded the underlying current account positions. This phenomenon has been accompanied by an increase in the volume of international equity transactions that accentuate the role of...