An empirical study that shows that countries’ reserve holdings are sensitive to the rates at which they can borrow on international financial markets, this analysis confirms the view that holding major currencies as reserve assets has costs that are frequently unrecognized. Between 1978-82 for...

The optimal provision of loan guarantees or deposit insurance is examined in the context of an overlapping generations model. It is demonstrated that even in the face of a market imperfection that precludes diversification of the private sector’s loan portfolio to eliminate risk, full...

This paper proposes an integrated and risk-based approach to the sequencing and coordination of reforms to develop domestic financial markets. The paper argues that there is a hierarchy of financial markets that reflects the complexity of risks in each market and the interlinkages among markets....

A firm theoretical basis for the empirical relationship between dependency rates and savings behavior in developing countries is still lacking. Two demographic extensions of the representative household’s stochastic dynamic optimization problem are presented here. It is shown that the...

This paper examines whether financial deregulation in the 1980s has reduced the importance of liquidity constraints in consumption patterns. Data for six industrialized countries are used to estimate a simple model incorporating liquidity constraints and forward looking behavior. It is concluded...

Inflation-forecast targeting is state of the art for monetary policy. This book explores first principles, including managing short-term policy trade-offs. The book also outlines efficient operational procedures and reviews the experiences of Canada, the Czech Republic, and India. The analysis...