Despite the widespread use of capital controls, India has experienced several balance of payments crises. This paper examines the solvency and sustainability of India's external imbalances and analyses the optimality of its capital flows. We use two approaches: an intertemporal model of the...

What is the effect of shocks to the terms of trade on a country's current account position? The Harberger-Laursen-Metzler effect predicts that an adverse shock to the terms of trade will worsen the current account balance; in contrast, the prediction of intertemporal models of the current account...

This paper examines whether there is a relationship between the commodity terms of trade (the price of primary commodities relative to the price of manufactures) and the net barter terms of trade of 42 Sub-Saharan African countries. For most countries, there is little evidence of a stable,...