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This paper examines the conceptual foundations of macroprudential policy by reviewing the literature on financial frictions from a policy perspective that systematically links state interventions to market failures. The method consists in gradually incorporating into the Arrow-Debreu world a variety of frictions and sources of aggregate volatility and combining them along three basic dimensions: purely idiosyncratic vs. aggregate volatility, full vs. bounded rationality, and internalized vs. uninternalized externalities. The analysis thereby obtains eight "domains," four of which include aggregate volatility, hence call for macroprudential policy variants grounded on largely orthogonal rationales. Two of them emerge even assuming that externalities are internalized: one aims at offsetting the public moral hazard implications of (efficient but time inconsistent) post-crisis policy interventions, the other at maintaining principal-agent incentives continuously aligned along the cycle. Allowing for uninternalized externalities justifies two additional types of macroprudential policy, one aimed at aligning private and social interests, the other at tempering mood swings. Choosing a proper regulatory path is complicated by the fact that the relevance of frictions is likely to be state-dependent and that different frictions motivate different (and often conflicting) policies.

Banks & Banking Reform --- Bounded rationality --- Collective action --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Externalities --- Financial crises --- Financial frictions --- Financial policy --- Labor Policies --- Macroeconomics and Economic Growth --- Macroprudential policy --- Principal-agent problems --- Pro-cyclical financial markets --- Prudential oversight --- Regulatory architecture

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This article studies the extent to which participation in productive associations in Nicaragua contributes to increase individuals' access to social programs and credit services. By participating in productive associations, individuals give a good signal to firms and are rewarded with better transactions and more access to the services they provide, ceteris paribus. Estimates using 2005 data indicate that households that participate in productive associations display higher access to credit and to social programs that promote investment. Additionally, participation in productive associations is weakly associated to more favorable credit outcomes among those households that receive loans, such as lower interest rates and a lower probability of wanting more credit than what was accessible to them.

Collective --- Collective action --- Collective action problem --- Communities & Human Settlements --- Corporate Law --- Debt Markets --- Finance and Financial Sector Development --- Housing and Human Habitats --- Individuals --- Insurance and Risk Mitigation --- Labor Policies --- Law and Development --- Municipality --- Principal-agent --- Principal-agent problems --- Proxy --- Public firms --- Social Protections and Labor --- Unions

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The authors analyze the Washington Consensus, which at its original formulation reflected views not only from Washington, but also from Latin America. Tracing the life of the Consensus from a Latin American perspective in terms of evolving economic development paradigms, they document the extensive implementation of Consensus-style reforms in the region as well as the mismatch between reformers' expectations and actual outcomes, in terms of growth, poverty reduction, and inequality. They present an assessment of what went wrong with the Washington Consensus-style reform agenda, using a taxonomy of views that put the blame, alternatively, on (i) shortfalls in the implementation of reforms combined with impatience regarding their expected effects; (ii) fundamental flaws-in either the design, sequencing, or basic premises of the reform agenda; and (iii) incompleteness of the agenda that left out crucial reform needs, such as volatility, technological innovation, institutional change and inequality.

Access to Finance --- Achieving Shared Growth --- Debt --- Debt crisis --- Debt Markets --- Developing countries --- Directed credit --- Domestic market --- Economic development --- Economic Theory & Research --- Emerging Markets --- Exchange rate --- Exchange rates --- Finance and Financial Sector Development --- Financial markets --- Interest rates --- International Bank --- International financial institutions --- Levy --- Macroeconomic policy --- Macroeconomics and Economic Growth --- Market failures --- Monetary policies --- Poverty Reduction --- Principal-agent problems --- Private Sector Development --- Public borrowing --- Public spending --- Tax