This paper examines the impact of trade costs on real exchange rate volatility. We incorporate a multi-country Ricardian model of trade, based on the work of Eaton and Kortum (2002), into a macroeconomic model to show how bilateral real exchange rate volatility depends on relative technological...

Anecdotal evidence relates corruption with high levels of military spending. This paper tests empirically whether such a relationship exists. The empirical analysis is based on data from four different sources for up to 120 countries in the period 1985–98. The association between military...

This paper examines the extent to which conclusions of cross-country studies of private savings are robust to allowing for the possible heterogeneity of savings behavior across countries and the inclusion of dynamics. It shows that neglecting heterogeneity and dynamics can lead to misleading...

Market reaction to a change in official interest rates will depend on the extent to which the change is anticipated, and on how it is interpreted as a signal of future policy. In this paper, a technique is developed to separate the anticipated and unanticipated components of such changes and is...

Developing countries fortunate enough to experience capital inflows haveseen rising levels of investment and enhanced economic growth. Capitalinflows have a negative side, however, in that they tend to appreciatethe domestic currency, making exports less competitive, and to encourageinflation....

Analyses of debt relief that focus on the behavior of debtors and existing creditors understate the incentives for collective action by creditors. It is well known that debt relief could benefit existing creditors by providing incentives for domestic investment by residents of debtor countries....