The paper discusses the historical background and institutional details of Hong Kong's currency board. We argue that its experience provides a good opportunity to test the macroeconomic implications of the currency board regime. Using the method of Blanchard and Quah (1989), we show that the...

This paper examines corruption from three perspectives-market imperfections, illegality, and investment in socially unproductive human capital. It argues that corruption is an optimal response to market distortions and may improve allocative efficiency. The paper discusses possible market...