Following Chairman Ben Bernanke’s comments before Congress that the FOMC may ‘take a step down in the pace of asset purchases if economic improvement appears to be sustained’, US 10-year interest rates picked up sharply and gross capital flows to emerging market economies (EMEs) reversed....

The volume collects the essays presented at the 15th Workshop on Public Finance organised by Banca d'Italia in Perugia from 4 to 6 April 2013. The workshop focused on the link between fiscal policy and macroeconomic imbalances and comprised four sessions. The first session concentrated on the...

Credit constraints that link a private agent's debt to market-determined prices embody a systemic credit externality that drives a wedge between competitive and (constrained) socially optimal equilibria, which induces private agents to ``overborrow". We quantify the effects of this externality...

From 1960-2009, the U.S. current account balance has tended to decline during expansions and improve in recessions. We argue that trend shocks to productivity can help explain the countercyclical U.S. current account. Our framework is a two-country, two-good real business cycle (RBC) model in...

This paper uses a Bayesian approach to estimate a standard international real business cycle model augmented with preferences with zero wealth-effect, variable capacity utilization and investment adjustment costs. First, I find that the bulk of fluctuations in country-specific outputs,...

Emerging market economy business cycles are typically characterized by high consumption and output volatility, strongly counter-cyclical current accounts, and counter-cyclical real interest rates. Evidence from the wider EME and less developed economy business cycle experience suggests however...

Credit constraints that link a private agent's debt to market-determined prices embody a systemic credit externality that drives a wedge between competitive and (constrained) socially optimal equilibria, which induces private agents to ``overborrow". We quantify the effects of this externality...

China is well-placed to avoid the so-called “middle-income trap” and to continue to converge towards the more advanced economies, even though growth is likely to slow from near double-digit rates in the first decade of this millennium to around 7% at the 2020 horizon. However, in order to...

The study is emphasizing the weak performances of the Romanian economy, unable to turn positive the current account deficits. On the contrary, because of rising problems in deficits financing through autonomous flows, the debt accumulation could lead Romania on the brink of entering a financial...

The paper updates a warning launched by the author a year earlier regarding the effects of Inward/Outward Processing Trade flows, already entered a marginal decrease path. The high volatility of these flows, totally escaping the perception of decision makers, is threatening Romania’s...