Empirically, traditional money demand equations are frequently characterized by periods of"missing money", unstable parameters, and autocorrelated errors. The common practice to solve these problems consists of changing the specification of the regressions once the shifts (which are usually...

The decline in private savings since 1982 is arguably the most important problem in high debt countries. A reversal of the trend is essential if growth is to be restored. Three factors predominate : 1) the extent of intertemporal substitution; 2) attitudes toward risk; and 3) private/public...

Commodity stabilization funds are hard-currency savings to protect against a fall in income for commodity exports in the presence of borrowing constraints. The authors develop the optimal rules for deposits in and withdrawals from such a fund by using a benchmark model of precautionary savings...

Traditional specifications of money demand have commonly been plagued by persistent overprediction, implausible parameter estimates, andhighly autocorrelated errors. The authors argue that some of these problems stem from the failure to account for the impact of financial innovation. They...

Pension reform is spreading around the globe, from Latin America to the OECD countries, and major reform projects are being discussed in many other developing, transition, and OECD countries. The authors survey current research issues and country experiences related to old-age social security...

Most models of economic growth are infinite horizon models that neglect the role of human capital in shaping life-cycle variables. This paper introduces training decisions in a life-cycle model to study the role of human capital both in life-cycle behavior and as an engine of growth. The crucial...

This paper estimates a monetary Euler system of a utility-maximizing representative consumer from two inflationary Latin American countries: Chile in the late seventies and Mexico in the early eighties. The results show that money is necessary to get reasonable parameters of the utility...

Between 1987 and 1990, Mexico's current account and trade balance deteriorated by more than US$10 billion. Higher investment accounts only partly for this deterioration; nor can it be attributed to the public sector. By conventional (unadjusted) measures of private saving - the total investment...

Most economists and specialists in international finance believe that the debt crisis hurts macroeconomic performance, particularly discouraging investment and growth oriented structural reforms. Identifiying the link between the foreign debt overhang and macroeconomic performance is essential...

Traditional specifications of money demand have been commonly plagued by persistent overprediction, implausible parameter estimates, and highly autocorrelated errors. This paper argues that some of those problems stem from the failure to account for the impact of financial innovation. We...