Search Results
Journal Article
Financial repression and economic development
Journal Article
Fully funded social security: Now you see it, now you don't?
Governments of countries around the world, including the United States, are considering implementing social security reform programs. In most cases, one of the principal goals of the reform program is to convert a pay-as-you-go social security system into a fully funded system. Most economists believe that the long-run macroeconomic benefits of a successful transition to a fully funded system are likely to be large relative to the benefits from social security reforms of other types. ; The authors of this article describe the basic differences between pay-as-you-go and fully funded systems ...
Working Paper
Debt maturity, risk, and asymmetric information
We test the implications of Flannery?s (1986) and Diamond?s (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data from more than 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond?s model and with much of the empirical literature. Our findings also suggest a strong ...
Journal Article
Reviewing Mexico's new bank accounting standards
Working Paper
A public finance analysis of multiple reserve requirements
This paper analyzes multiple reserve requirements of the type that have been imposed by a number of developing countries. We show that previous theoretical work on this topic has not succeeded in providing a social welfare rationale for the existence of multiple reserve requirements: in the basic reserve requirements model, any allocation that can be supported by a multiple-reserves regime can also be supported by a single-bond reserve requirement. We go on to present extended versions of the model in which it is possible for a multiple-reserves regime to improve social welfare relative to ...
Journal Article
A primer and assessment of social security reform in Mexico
Recent projections of a number of countries with pay-as-you-go pension systems have shown significant future actuarial imbalances. As a consequence, several of these countries, including Mexico, are engaged in redesigning their pension systems. ; From the U.S. perspective, Mexico's reform is of particular interest because of the similarities of its program to some proposals for the U.S. system. The Mexican government claims that it has started a move to a fully funded system. As proof, it points out that since 1997 Mexico has adopted a privately managed defined-contribution system. However, a ...
Working Paper
A welfare rationale for multiple reserve requirements
Journal Article
Are all monetary policy instruments created equal?
Journal Article
The Mexican economic crisis: alternative views
The authors of this article suggest that many of the explanations for the 1994 crisis are based on questionable assumptions and dubious analysis. They contend that, when trying to explain the crisis, most authors have concentrated on the wrong economic "fundamentals." They challenge the conventional view that the crisis was caused by a combination of flawed fiscal, monetary, and exchange rate policies. Their explanation for the crisis belongs in an alternative camp that emphasizes the vulnerability of the Mexican financial system to swings in expectations and investor confidence. ; In their ...
Working Paper
The long-run real effects of monetary policy: Keynesian predictions from a neoclassical model
In this paper we integrate Diamond's (1965) model of neoclassical production and capital with Wallace's (1984) model of monetary policy in order to study the real effects of two types of monetary policy actions: open market operations and changes in reserve requirements. We show that a permanent easing of open market or reserve policy can produce permanent increases in both the inflation rate and the level (but not the growth rate) of output. We also describe conditions under which the effects of these policies on real interest rates and output can be large relative to their effects on the ...