This paper investigates the relationship between economic and social development. Contrary to the view of those who believe in the existence of a tradeoff between democracy and growth, the paper contends that consensus-building, open dialog and the promotion of an active civil society are key...

Because of financial market imperfections, such as those generated by asymmetric information in financial markets, whic h lead to breakdowns in markets, like that for equity, in which risks are shared, firms act in a risk-averse manner. The resulting macroeconom ic model accounts for many widely...

Implicit contract theory has been successful in explaining wage rigidity but not unemployment. We argue that the theory has paid insufficient attention to (i) the general equilibrium aspects and (ii) constraints limiting the set of feasible contracts. Implicit, as opposed to explicit contracts,...

Traditional theory emphasizes the key role that monetary policy can play through the manipulation of interest rates. But there are several puzzles that cannot be reconciled with standard models. These include: the apparent constancy in interest rates over extended periods, and changes at other...

A major problem for institutional lenders is ensuring that borrowers exercise prudence in the use of the funds so that the likelihood of repayments is enhanced. One partial solution is peer monitoring: having neighbors who are in a good position to monitor the borrower be required to pay a...

This paper uses a variant of the standard search model to examine market equilibrium and the co nsequences of an increase in the number of firms. If marginal search costs increase with the number of searches, then the demand curve fac ing any firm will be kinked, with the elasticity of demand...