Developing countries are constrained in financing current account deficits as real capital mobility is still far from perfect. At the same time, capital flows to these countries proved to be extremely volatile. The paper argues that the long-term problem of "too little" should not be confused...

The claim of globalization critics that the income gap to industrial countries is bound to widen for essentially all developing countries as a consequence of economic globalization is in conflict with empirical evidence. Economic performance differs tremendously across developing countries. We...

How is a developing country affected by its government's ability to borrow in international markets? We examine the dynamics of a country's growth, consumption, and sovereign debt, assuming that the government's objective is to maximize short-term, typically wasteful, expenditures. Sovereign...

How is a developing country affected by its government's ability to borrow in international markets? We examine the dynamics of a country's growth, consumption, and sovereign debt, assuming that the government's objective is to maximize short-term, typically wasteful, expenditures. Sovereign...

We argue that the disincentive effect of a debt overhang is generally small and consequently that debt reduction does not lead to important efficiency gains on this account. Instead, we develop a framework that highlights the inefficiency created by the liquidity constraint faced by...

Developing countries are constrained in financing current account deficits as real capital mobility is still far from perfect. At the same time, capital flows to these countries proved to be extremely volatile. The paper argues that the long-term problem of "too little" should not be confused...