Bernardo V. Guimaraes
Sao Paulo School of Economics - FGV.
R Itapeva 474, Sao Paulo, SP
Information about this author at RePEc
NBER Working Papers and Publications
|May 2013||Isolated Capital Cities and Misgovernance: Theory and Evidence|
with Filipe R. Campante, Quoc-Anh Do: w19028
Motivated by a novel stylized fact - countries with isolated capital cities display worse quality of governance - we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating ...
|December 2003||International Lending of Last Resort and Moral Hazard: A Model of IMF's Catalytic Finance|
with Giancarlo Corsetti, Nouriel Roubini: w10125
It is often argued that the provision of liquidity by the international institutions such as the IMF to countries experiencing balance of payment problems can have catalytic effects on the behavior of international financial markets, i.e., it can reduce the scale of liquidity runs by inducing investors to roll over their financial claims to the country. Critics point out that official lending also causes moral hazard distortions: expecting to be bailed out by the IMF, debtor countries have weak incentives to implement good but costly policies, thus raising the probability of a crisis. This paper presents an analytical framework to study the trade-off between official liquidity provision and debtor moral hazard. In our model international financial crises are caused by the interaction of ba...
Published: Corsetti, Giancarlo, Bernardo Guimaraes and Nouriel Roubini. "International Lending Of Last Resort And Moral Hazard: A Model Of IMF's Catalytic Finance," Journal of Monetary Economics, 2006, v53(3,Apr), 441-471. citation courtesy of