Abstract: This paper surveys empirical research that shows that small and medium enterprises (SMEs) are more constrained by financing and other institutional obstacles than large enterprises, exacerbated by the weaknesses in the financial systems of many developing countries. We use the concept of the access possibilities frontier to explain how difficulties in managing risk and transaction cos...

During the financial crisis in Asian countries such as Thailand, macro-economic aggregates were used to portray the health or state of the impacted economy. Negative GDP growth was taken to indicate a fall in household welfare, for example. Initially high interest rate policies to encourage foreign (re)investment and subsequent expansionary monetary and fiscal policies were the result. On top o...

Distributional consequences typically receive limited attention in economic models that analyze the effects of monetary and financial sector policies. These consequences deserve more attention since financial markets are incomplete, imperfect, and economic agents’ access to them is often limited. This limits households’ ability to insure against household-specific (or sector-specific) shocks an...

A generalised search model with matching on product, labour and financial markets is presented in order to analyse the impact of market frictions on the pass-through of shocks. The model includes an endogenous demand for money that arises from matching frictions on the financial market. Moreover, price posting on retail markets allows to establish a forward-looking Search Phillips Curve. The mo...

Using panel data from the 2007-09 Survey of Consumer Finances, this research explores channels through which the Great Recession affected households’ demand for life insurance policies. Existing literature suggests that the economic downturn induced changes in insurance coverage due to both financial and psychological shocks. This paper utilizes Probit regressions with differenced explanatory v...

Recent macro developments in the euro area have highlighted the interactions between fiscal policy, sovereign debt, and financial fragility. We take a structural macroeconomic model with frictions in the financial intermediation process, in line with recent research, but introduce asset choice and sovereign debt holdings in the portfolio of banks. Using this model, we emphasize a new crowding-o...

It is frequently assumed that rising enrollment improves an institution’s financial condition. In fact, enrollment growth can have an adverse impact on the institution’s financial condition, even in the presence of excess capacity. The reason for this surprising conclusion is that the size of the subsidy required to attract additional students may cause the net financial impact to be negative. ...