In this paper, the consequences on financial stability of the institutional design envisaged in the Maastricht Treaty - which implicitly assigns the objective of financial stability to the National Central Banks (NCBs) - are assessed. The Maastricht Treaty spells out precisely the role of the...

We reconsider Svensson's inflation-targeting proposal in a model where the need to raise seigniorage revenues determines the socially optimal inflation rate and distortionary taxes cause the inflation bias. Interpreting the targets as contracts, we show that the interaction between fiscal and...

Entry into a network industry is modeled focusing on consumers' expectations formation through higher order beliefs. Equilibrium expectations are endogenous and depend on prices, acting as a coordination device among consumers. The model is able to account for aggressive pricing policies by the...

Why firms apply for credit at several banks? The model presented here provides an answer, based on the customer relationships approach. A bank makes an initial investment in information production on a borrowing firm; such an investment must later be compensated: the firm has to share its...