ABSTRACT
In Chapters 2, 3 and 4 we have examined the comparative statics of interest rate deregulation by considering certain factors but by ignoring the others. Thus, for example, in Chapter 2, while we allow for the implications of interdependence between portfolio allocation and consumption/saving decisions and thus for the indirect effects of deregulation via wealth effects, we ignore foreign aid and informal credit markets and assume budget deficits to be exogenously determined. In Chapter 3, while we endogenize budget deficit and introduce foreign aid, we still ignore informal credit markets. While Chapter 4 rectifies this shortcoming, it does so only by ignoring foreign aid and assuming that budget deficit is given.
