infonet-economy

This paper develops a model with sequential production stages and international trade frictions that permits an analysis of how decreases in trade costs shape the interdependence between countries, with special focus on the joining and industrialization pattern of developing countries into the global value chains (GVCs). I show that in a two-country setting, a decrease in trade costs...

Understanding the institutional features that can improve learning outcomes and reduce inequality is a top priority for international and development organizations around the world. Economists appear to have a good case for support to non-governmental alternatives as suppliers of schooling. However, unlike other policy domains, freer international trade or privatization, economists...

It is well established that private information is critical to our understanding of asset prices. In this paper we argue that it also affects international capital flows and use a simple two-country DSGE model to illustrate its impact. We show that private information (i) increases the volatility of both net and gross capital flows, (ii) leads to a high correlation between capital...

While the impact of exchange rate changes on economic growth has long been an issue of key importance in international macroeconomics, it has received renewed attention in recent years, owing to weaker growth rates and the debate on “currency wars”. However, in spite of its prevalence in the policy debate, the connection between real exchange rates and growth remains an unsettled...

This paper uses an instrumental variable approach to study whether public debt has a causal effect on economic growth in a sample of OECD countries. The results are consistent with the existing literature that has found a negative correlation between debt and growth. However, the link between debt and growth disappears once we instrument debt with a variable that captures valuation...

How can the private sector work for development? This paper provides answers to this question from the firms’ perspective by examining the trade-offs that private firms face between maximizing their profits and achieving a positive social impact. In particular, it considers the experience of microfinance as the best available data source from the point of view of a firm engaged in...