Nominal interest rate pegging leads to instability in an IS-LM model with a vertical long-run Phillips curve and backward-looking inflation expectations. However, it does not lead to instability in several large multicountry econometric models, apparently primarily because these models have...

A small macroeconomic model based on familiar theoretical considerations is developed and estimated using data from 31 developing countries. Efficient estimation techniques are used to control for country heterogeneity under the assumption of rational expectations. The estimates and the test...

The aim of the paper is to shift the focus of famine analysis away from food supply towards the macroeconomic determinants of food entitlement—i.e., to the ability of individuals to purchase food. Towards this end, we develop a model to demonstrate how loose monetary and fiscal policies may...

This paper considers the merits of reducing or eliminating some specific tax expenditure measures currently in force in the United States with a view to reducing the federal fiscal deficit. The paper starts from the observation that savings decisions in the United States are distorted and that...

The dynamic responses of a developing economy to a variety of policy and external shocks are studied using an empirical macroeconomic model which embodies rational expectations, perfect capital mobility, and import rationing. These features, which are relatively new in developing-country...

Summarizes the for ward-looking analytical work program on macroeconomic issues related to the Poverty Reduction Strategy Paper approach. The program is evolving through a process that began with a technical workshop; participants from low-income countries, donors, academia, and civil society...

This Selected Issues paper discusses Romania’s modeling monetary policy. A simple Forecasting and Policy Analysis System (FPAS) for Romania has been designed to help in the preparation of the IMF staff’s forecasts and policy assessments. A major advantage of this approach is that...

This paper examines the inflation expectations, monetary policy credibility, and dollarization. Country fundamentals have explained variation in sovereign spreads, but external factors play an important role. This paper assesses the role of and prospects for bank-lending from a cyclical and...

The analysis in this paper suggests that the large fiscal deficits that Pakistan has experienced over most of the period since 1970 led to some crowding out of private investment, resulting in slower output growth than would otherwise have been observed. Past fiscal deficits have also resulted...