This paper evaluates the growing literature on whether devaluation has contractionary effects on output in developing countries. It explores the nature of the links between the exchange rate and real output within a unified, fairly general analytical framework which incorporates a number of the...

This paper develops a small analytical model to explore the relationship between the dynamics of macroeconomic adjustment and the timing of the implementation of an adjustment program featuring a nominal devaluation. The effects of postponing adjustment depend on the source of the original...

In pursuing a steady-state reserve target, policymakers in small open economies can resort to devaluation or to temporary increases in public saving. This paper contrasts the dynamic implications of these alternative policies in a model with optimizing agents who possess perfect foresight. In...

This paper discusses the behavior of futures prices for foreign exchange in Brazil during a period of high inflation and successive stabilization attempts (1989-92). After testing for futures prices unbiasedness and predicability by applying the Generalized Method of Moments, the paper argues...

This paper examines the types of market-related hedging instruments that could potentially be useful to indebted developing countries as they seek to manage the financial risks created by variability of the prices of external assets and commodities. The paper reviews the variability in interest...

Since the financial crisis in 1997-98, Korea has made major progress in financial, and corporate sector reform - the supervisory and regulatory regime for the financial sector has been substantially strengthened, and recent reforms helped achieve a high degree of observance of international...

The IMF, as Trustee of the Poverty Reduction and Growth Trust (PRGT or Trust), has entered into a new borrowing agreement with the Government of Canada (Canada), and has entered into amendments to the 2010 borrowing agreement with De Nederlandsche Bank NV (The Netherlands) and the 2011 borrowing...

This Background Paper provides a broad overview of the structure and characteristics of public finances in Korea, and discusses fiscal policy against the background of the medium-term objectives. The analysis shows that despite constraints imposed by the institutional framework, the government...

The Republic of Korea’s 2008 Article IV Consultation highlights that Korea’s business cycle is turning downward while inflation pressures have increased. Risks are mainly external and on the downside, but a volatile domestic political environment also clouds the outlook. Inflation pressures...