Search Results
Working Paper
Real exchange rate movements in high inflation countries
We empirically assess the sources of fluctuations in the real exchange rates of four high inflation countries, for which monetary shocks are generally believed to be predominant. In a benchmark model we identify fiscal, monetary, and output shocks based on a general-equilibrium optimizing model. We then estimate two alternative extensions. In the first, we decompose the output shock into supply and demand disturbances; in the second, the monetary shock is further decomposed into money supply and nominal exchange rate disturbances. Monetary shocks are found to be generally significant. Real ...
Working Paper
Financial matchmakers in credit markets with heterogeneous borrowers
What happens when liquidity increases in credit markets and more funds are channeled from borrowers to lenders? We examine this question in a general equilibrium model where financial matchmakers help borrowers (firms) and lenders (households) search out and negotiate profitable matches and where the composition of heterogeneous borrowers adjusts to satisfy equilibrium entry conditions. We find that enhanced liquidity causes entry by all borrowers and tends to benefit low-quality borrowers disproportionately. However, liquid credit markets may or may not be associated with higher output and ...
Journal Article
Health and Economic Development from Cross-Country Perspectives
In this article, we provide a comprehensive overview of the role that health plays in economic development. We study cross-country differences in income and health and examine the underused value-of-life and life-year gain measures. In particular, we compare two value-of-life measures, one based on life expectancy and lifetime utility, and the other based on adult mortality and life insurance data. We find that the perception and receptiveness of life insurance are likely better in countries at more advanced stages of economic development. The value-of-life measure based on life insurance ...
Journal Article
Financial development and growth
Poor performance by the financial sector can be costly for society. On the other hand, a healthy banking sector has been thought by some to contribute to the growth of the economy. Recently, though, economists have begun to analyze new elements of the linkages between the financial and real sides of the economy. ; This article provides an illustrative model that is meant to capture current thinking about the ways in which financial intermediaries affect growth. The model shows how households, firms, and financial intermediaries interact to determine equilibrium growth rates and various ...
Journal Article
High inflation: causes and consequences
Using evidence from seven hyperinflationary episodes in four Latin American countries in the second half of the 1980s, John Rogers and Ping Wang examine the causes and consequences of high inflation. The article emphasizes four issues: the welfare costs of inflation and real costs of stabilization, the common features of the chronically high inflations experienced in Latin American countries, the main causes of high inflation, and the widely different outcomes of several stabilization programs. ; Rogers and Wang find that the welfare costs of even moderate periods of inflation may not be ...