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, finance and economics have their own failures, with abstract theory bearing little relation with the real economy … of, the lack of guidance from theory. The analytics of Islamic economics and finance may not differ from standard …
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We introduce financial frictions in a two sector model of international trade with heterogeneous agents. The level of specialization in the economy (economic development) depends on the quality of financial institutions. Underdeveloped financial markets prohibit an economy to specialize in...
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