This article proposes that technological progress in financial intermediation can make the economy more fragile if it is not accompanied by a proportional degree of technological progress in the real sector. In the model economy discussed, firms are operated by heterogeneous managers who differ...

This paper compares the stochastic behavior of fiscal variables under optimal fiscal policy for the cases of full commitment (Ramsey problem) and partial commitment by the government (focusing on differentiable Markov perfect equilibrium). It shows that, around the steady state, the properties...

Political distortions can aggravate macroeconomic volatility. The aim of this paper is to analyze a fiscal policy institution capable of reducing the influence of such distortions on fiscal policy outcomes. We introduce the distinction between mandatory and discretionary public spending in the...

This paper postulates the existence of a negative relationship between technological progress and citizens' political engagement in developed economies. Theoretically, technological progress decreases the citizen relative utility from political participation. Empirically, the data covering a...

This paper investigates the impact of geographical neighbors on the political instability of a country and the role of a country's international relations in shaping the impact of its geographical neighbors. First, we show that political instability in neighbor countries has a strong positive...

In this paper we explore the relationship between international trade openness and two major political distortions, political polarization and political instability. We consider both the extensive and intensive margins of trade as measured by the number of trade partners and trade volume,...

This paper contributes to the empirical literature on the non-trivial relationship between financial development and economic growth. Based on panel data from 98 developed and developing countries, we show that for smooth economic development, balanced growth of both the industrial and financial...

This paper explores the impact of international trade and financial networks on current account balances in a large sample of developing and developed countries. The financial and trade inter-country networks centrality measures are computed based on the structure and volume of trade flows and...

This paper investigates the impact of regional political instability on the political instability of a country. Our identification strategy relies on the spatial nature of international relations. We use the characteristics of the neighbors' neighbors as the instruments for the neighbors'...