This paper explores, both formally and empirically, the political accountability mechanisms that lie behind the varying levels of public corruption and of effective governance taking place across nations. The first section develops a principal-agent model in which good governance is a function...

This paper presents theory and evidence on the relationship between inequality and institutional quality. We propose a model in which the two dynamically reinforce each other and set out to test this relationship with a broad array of institutional measures. We establish double causality between...

This paper considers ongoing and proposed reforms of the international financial system in light of Latin America`s recent experience. Most proposals are based on one of three diagnoses: excessive capital flows, insufficient capital flows, and excessively volatile capital flows. While theories...

Countries that are classified as having floating exchange rate systems (or very wide bands) show strikingly different patterns of behavior. They hold very different levels of international reserves and allow very different volatilities in the movements of the exchange rate relative to the...

This paper presents theory and evidence on the determinants of the size of the informal sector. We propose a simple theoretical model in which the informal sector`s size is negatively related to institutional quality and positively related to income inequality. These predictions are then...

This paper builds a new dataset on bank ownership and bank performance covering approximately 50,000 observations for 119 countries over the 1995-2002 period. The paper then uses the dataset to reassess the relationship between bank ownership and bank performance, providing separated estimations...

Should state-owned enterprises change chief executive officer before privatizing? We test competing views on this question by complementing a recently released database with newly collected data. We are able to cover 77 telecommunications privatizations, which account for nearly 80 percent of...

This paper tests the efficiency of different structures of bank ownership in terms of its ability to target manufacturing sectors in need of credit. We find that state- owned banks do not play a significant role in the development of industries that rely more on external finance and/or that have...