We analyze the role of international trade and health coordination during a pandemic by developing a two-economy, two-good trade model integrated into a micro-founded SIR model of infection dynamics. Governments can adopt containment policies to suppress infection spread domestically, and levy...

The paper introduces the problem of unawareness into Principal-Agent theory and discusses optimal incentive contracts when the agent may be unaware of her action space. Depending on the agent's default behavior, it can be optimal for the principal to propose an incomplete contract (that keeps...

This paper studies the optimality, sustainability, and distributive consequences of public debt in a simple model of saving and investment with incomplete markets and heterogeneous agents. The model features households and firms, which face non-insurable idiosyncratic productivity shocks. There...

The paper integrates the problem of designing corporate bankruptcy rules into a theory of optimal debt structure. We show that, in an optimal contracting framework with imperfect renegotiation, having multiple creditors increases a firm's debt capacity while increasing its incentives to default...

This paper reviews the first evidence on the impact of European Monetary Union on European capital markets, one year after the launch of the single currency. Our assessment of this evidence is very favourable. On almost all counts EMU has either changed the European financial landscape already...

The paper explores the determinants of yield differentials between sovereign bonds, using euro-area data. There is a common trend in yield differentials, which is correlated with a measure of aggregate risk. In contrast, liquidity differentials display sizeable heterogeneity and no common...