Search

1. INTRODUCTION Throughout 2022, US labor markets remained stubbornly tight despite the Federal Reserve raising interest rates rapidly in an effort to cool demand and tame inflation. The latest unemployment [...]

1 INTRODUCTION Occupations signify people's economic standing: One can safely assume that doctors and lawyers are better off than cooks and janitors. In this article, we ask how much information [...]

1 INTRODUCTION The Great Recession left a deep, persistent mark on the U.S. labor market. By October 2009, the unemployment rate shot up to 10 percent from its pre-recession level [...]

The authors apply the analysis of Hsieh and Klenow (2009) to assess the degree of resource misallocation in the Republic of Korea manufacturing sector from 1982 to 2007. They find [...]

This paper studies whether transparency (measured by accuracy and frequency of macroeconomic information released to the public) leads to lower borrowing costs in sovereign bond markets. We analyze the data generated during 1999-2002 when the International Monetary Fund (IMF) instituted new ways for countries to increase their transparency--by publishing the IMF's assessment of their policies and committing to release more accurate data more frequently. The IMF's preexisting internal timetable for country reports introduced exogenous variation when countries were faced with the option to become more transparent. We exploit this time variation and construct instruments to estimate the impact of transparency on bond yields in a way that is free from endogeneity bias. We find that countries experience a statistically significant decline in borrowing costs (11 percent reduction in credit spreads on average) when they choose to become more transparent. The magnitude of the decline is inversely related to the initial level of transparency and the size of the debt market. [JEL F34, G14] IMF Staff Papers (2007) 55, 183-209. doi:10.1057/palgrave.imfsp.9450028; published online 22 January 2008, A growing literature examines the role of institutions in determining countries' economic performance. It has been argued that better institutions lead to more developed financial markets (La Porta and others, [...]

AbstractWhy doesn't capital flow into fast-growing countries? Using a model with heterogeneous producers and underdeveloped domestic financial markets, we explain the joint dynamics of total factor productivity (TFP) and capital flows. When a large-scale economic reform removes preexisting idiosyncratic distortions in a small open economy, its TFP rises, driven by efficient reallocation of economic resources. At the same time, because of the domestic financial frictions, saving rates surge but investment rates respond only with a lag, resulting in capital outflows. The dynamics of TFP, capital flows, and idiosyncratic distortions in the model are consistent with what is observed during growth acceleration episodes, which often follow large-scale economic reforms. (JEL E21, E22, F21, F32, O16, O47)