This is a useful paper, for three reasons. First, as a partial equilibrium contribution, it offers a nice and tractable characterization of bank intermediation, rich enough to capture many of the mechanisms central to the crisis. Second, as a general equilibrium contribution, the assumptions used to integrate the model of banks in a general equilibrium setting lead to an elegant closure (althou...

We investigate the interaction between labour and credit market imperfections for equ ilibrium unemployment in the presence of profit sharing. Our analysis highlights the critical role of the outside option available of employees for the evaluation of the employment implications of intensified credit market competition. In a partial equilibrium with exogenous outside options increased bargainin...

A partial equilibrium model of stochastic crop production is used to analyze the impacts of subsidized crop insurance on the extensive margin of agricultural production. It is shown that land use is unchanged only when an actuarially fair, perfectly separating insurance contract is offered. For actuarially fair, pooling equilibrium contracts, however, land with a minimum quality that is strictl...

We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible pr...

The authors of this paper explore some of the benefits of interest rate targeting in both partial equilibrium and general equilibrium environments. They find that an interest rate peg is desirable because such a policy mitigates the distortions that arise in a monetary economy. In order to achieve the interest rate peg, money growth should be procyclical. This increase in output variability is ...

We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible pr...

The objective of the present paper is to review the literature on the link between environmental policy and international trade, with a focus on imperfect competition on the world output markets. Special attention will be paid to the literature on oligopoly and strategic government policy and its potential consequences for the ecological dumping debate. We address partial equilibrium as well as...