THE SUPPLY OF MONEY AND BANK CREDIT IN ARGENTINA

Financial Economics,

Economics and Mental Health

This paper is concerned with the economics of mental health. We argue that mental health economics is like health economics only more so: uncertainty and variation in treatments are greater; the assumption of patient self-interested behavior is more dubious; response to financial incentives such as insurance is exacerbated; the social consequences and external costs of illness are formidable. We elaborate on these statements and consider their implications throughout the chapter. Special characteristics' of mental illness and persons with mental illness are identified and related to observations on institutions paying for and providing mental health services. We show that adverse selection and moral hazard appear to hit mental health markets with special force. We discuss the emergence of new institutions within managed care that address long-standing problems in the sector. Finally, we trace the shifting role of government in this sector of the health economy.

Can the Gains from Argentina's Utilities Reform Offset Credit Shocks?

Computable general equilibrium, Regulation

Theoretical Aspects to the Finnish Credit Cycle

The paper discusses the possibility that the workings of the financial system contributed the boom-bust cycle in the Finnish credit market since the mid-1980s. We begin with a review of the most prominent theoretical arguments about the role of "financial factors". Also the main findings of a vast empirical literature are summed up. This is followed by a description of the salient features of the Finnish credit cycle and the associated banking crisis. The evolution of credit stocks and interest rates are then analyzed on a relatively high level of aggregation from the perspective of the theoretical arguments discussed. The main conclusions are: First, changes in the balance sheets of firms and households very likely contributed to both the rapid growth of credit in the late 1980s and its subsequent steep contraction. Second, the observations are also consistent with the conjecture that supply of bank credit very likely increased in the late 1980s and contracted in the early 1990 relative to other sources of credit. Third, some differences observed in the behaviour of different bank groups suggest that moral hazard related to underpriced bank liabilities may have contributed to the growth of lending in the boom period, and problems with capital adequacy may have constrained bank lending in the early 1990s. Stylized facts are consistent with these conjectures. However, to reliably infer about these moral hazard and credit crunch hypotheses, in-depth analysis of bank behaviour with micro data is required. Similarly, ascertaining the role of borrower balance sheets requires analysis of borrowers of different characteristics.credit cycle; financial factors; lending policies; moral hazard; credit crunch

Can a "credit crunch" be efficient?

Two observations have sometimes been viewed as evidence that the equilibrium allocations of intermediated credit markets are inefficient. First, low-income households' marginal propensity to consume is close to unity. Second, even high-income households seem to face nonprice constraints during recessions. This paper presents a model that possesses both of these features. (A recession is modeled as an economy in which the equilibrium level of investment is at its lowest possible level.) However, contrary to the conventional view, the equilibrium of this model is ex ante efficient. The model also sheds light on some historical episodes of credit restraint.Credit

The Pure Theory of Country Risk

This paper attempts to survey, and to put into perspective, recent lterature that has analyzed the nature of credit relations between developed and developing countries.This analysis has made use of recent advances in the economics of information and strategic interaction. Traditional concepts of solvency and liquidity are of little help in understanding problems of soverign debt. Creditors do not have the means to seize the assets of a borrower in default. Hence the borrower who is expected eventually to repay his debts should be able to borrow to meet any current debt-service obligations. A problem that is essential to a theory of international lending is that of enforcement. The difficulty is one of ensuring that the two sides of a loan contract adhere to it, in particular that the borrower repays the lender and the lenders can commit themselves to penalize the borrower if he does not.