One interpretation of the RBC research program is that it was meant to identify and incorporate into dynamic general equilibrium models those market imperfections which are most relevant for macroeconomic theory and policy. This paper reviews the methodological basis for this interpretation. It...

We discuss the extent to which the expectation of a rare event, not present in the usual postwar sample data, but not rationally excludable from the set of possibilities - the peso problem -, can effect the equilibrium behavior of rational agents and the characteristics of market equilibrium. To...

P A R T 1 - Introduction -- C H A P T E R 1 On the Role of Financial Markets and Institutions -- 1.1 Finance: The Time Dimension -- 1.2 Desynchronization: The Risk Dimension -- 1.3 The Screening and Monitoring Functions of the Financial System -- 1.4 The Financial System and Economic Growth --...