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...

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...

The Selected Issues paper and Statistical Appendix on Cape Verde review determinants of emigrant deposits (ED). EDs have provided a substantial source of foreign exchange to the Cape Verdean economy, and have been vital in maintaining the fixed exchange rate. Prospects for growth in Cape Verde...

This Selected Issues paper on Samoa reports that remittances are the main source of foreign exchange to the Samoan economy. In addition to remittances, travel credits also play an important role in the economy. Official transfers are also significant, and should remain an important source of...

In the last decade Cape Verde has experienced a strong accumulation of emigrant deposits. These deposits have provided much needed foreign exchange to the country, adding support to the exchange rate peg. This paper studies the long-run determinants of emigrant deposits with respect to risk,...

This paper explores the role of foreign aid and remittance inflows in the mitigation of the effects of food price shocks. Using a large sample of developing countries and mobilising dynamic panel data specifications, the econometric results yield two important findings. First, remittance and aid...

The current account deficit by the Central Bank of Bosnia and Herzegovina in recent years has fluctuated to about 20 percent of GDP. But official current account statistics suffer from several shortcomings. Possible sources of the savings required to achieve a fiscal position consistent with...

The dominant role of remittances in Comoros’s economy presents policymakers with important challenges and opportunities. Fiscal decentralization is a pillar of national reconciliation in Comoros. To make decentralization work better, more revenue and expenditure responsibilities could be...

This Selected Issues paper on the Republic of Kosovo’s 2013 Article IV Consultation highlights growth and Kosovo’s external environment. In the wake of the global financial crisis, Kosovo’s economic growth slowed but remained positive, while most other Western Balkans...