Contents

Introduction 1

0. Modeling Credit Markets 5

1. Volatility and Growth: AK versus Schumpeterian

Approach 10

2. Financial Development and the Effects of Volatility on

Growth 23

3. Endogeneizing Volatility: Pecuniary Externalities and

the Credit Channel 49

4. Endogenous Volatility in an Open Economy 68

5. The Third Generation Approach to Currency Crises 90

Conclusion 124

References 130

Index 137

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