The buildup of interenterprise credit in many Central and Eastern European countries is often seen as a problem that requires a government bailout. The authors show that arrears rise only temporarily, as the hard budget constraint bites, and then plateau. Therefore, they argue that while...

Capital flows to the nonindustrial countries share three striking characteristics. First, the bulk of these flows was in the form of debt, not equity; second, the loans were mostly to, or guaranteed by, debtor governments; and third, these debts were largely bank loans, not bonds. This paper...

This article develops a model allowing asymmetric information between two bidders in an auction for a common-value object. It supposes that there is a common prior distribution on the object's value and that each bidder receives a private signal conditional on the object's unknown true value....

Recent articles have shown that contracts can support the efficient outcome for bilateral trade even in the face of specific investments and incomplete contracting. These studies typically considered 'selfish' investments that benefit the investor (e.g., the seller's investment reduces her...

Would a seller prefer to sell multiple objects through sequential or simultaneous auctions? Sequential auctions with bids announced between sales seem preferable because the bids may convey information about the value of objects to be sold later. The auction literature shows that this...