Infrastructure projects often require large investments, can have long gestation periods, and typically involve multiple parties: government, private sector firms and outside investors. Government and private sector firms must expend effort to implement and maintain the projects, may derive private benefits in participating in the project, and may possess only limited information. Moreover, gov...

Like other nascent and emerging markets, China’s stock markets are highly imperfect, reflecting inadequate disclosure, ineffectual regulatory supervision, opaque corporate governance and legal framework, ownership restrictions, weak shareholder protection, etc. Reflecting the wide-spread perception, Chinese stock markets are often depicted as something like “casinos driven by fast money flows i...

Using transaction data from Indonesia, this paper shows that domestic investors have higher profits than foreign investors. In addition, clients of global brokerages have higher long-term and smaller medium (intramonth) and short (intraday) term profits than clients of local brokerages. This suggests that clients of local brokerages have a short-lived information advantage, but that clients of ...

We characterize the optimal long-term financial contract in a setting in which a risk-neutral agent with limited capital seeks external financing for a project which pays stochastic cash flows over many periods. These cash flows are unobservable and unverifiable by outside investors. The agent can be induced to pay investors via the threat of the loss of control of the project. After solving fo...

In theory, competitive electricity markets can provide incentives for efficient investment in generating capacity. We show that if consumers and investors are risk averse, investment is efficient only if investors in generating capacity can sign long-term contracts with consumers. Otherwise the uncovered price risk increases financing costs, reduces equilibrium investment levels, distorts techn...

In this paper we seek to explain the behavior of the long term interest rate in the U.S. over the last 50 years using the idea that investors had only limited information about the process generating short term interest rates. Investors are assumed to behave according to the expectations hypothesis of the term structure but use econometric methods to learn about the appropriate model for short ...