Widespread support for capital account liberalization in emerging markets has recently shifted to skepticism and even support for capital controls in certain circumstances. This sea-change in attitudes has been bolstered by the inconclusive macroeconomic evidence on the benefits of capital account liberalization. There are several compelling reasons why it is difficult to measure the aggregate ...

The non-tradability of human capital is often cited for the failure of traditional asset pricing theory to explain agents’ portfolio holdings. In this paper we argue that the opposite might be true — traditional models might not be able to explain agent portfolio holdings because they do not explicitly account for the fact that human capital does trade (in the form of labor contracts). We deriv...

We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations, to show the effect of key ingredients of dynamic competition on firm strategies and industry dynamics in addition to the usual static interaction. These effects are the static market externali...

This paper analyzes the short-term effects of foreign capital flows on aggregate demand in Mexico: their magnitude, transmission channels, and the possible influence of the country’s choice of exchange rate regime. The study is motivated by the introduction of a floating system in December 1994, in a context of renewed volatility of international capital flows. During the band period, in the ea...