This paper answers the question of whether non-strategic default improves welfare, not only for borrowers with uncertain future income but also for lenders with certain future endowments, relative to no default. We show that the answer is a¢ rmative for a positive-Lebesgue-measure set of...

We review the experiences of developing countries with market-oriented reforms, using the tools of modern political economy. We impose intellectual discipline by requiring that actors behave rationally using available information and that basic economic relationschips such as budget constraints...

I extend the traditional Diamond Dybvig framework with aggregate liquidity shocks to small open economies. Currency board may imply perfect risk sharing (with perfect credit markets), contrary to Chang and Velasco’s …ndings (2000). With interim-date borrowing constraints and …xed exchange...

We bootstrapped spot rates for Argentinean and U.S. federal government debt instruments, and fitted them with smoothing cubic splines, a non-parametric method, to estimate the term structure of interest rates. When estimating the term structure one must decide how close should the data be...