This paper builds on the methodology developed by Chudik and Mongardini (2007) to estimate the relationship between grants and remittances and the equilibrium real exchange rate in Sub-Saharan African (SSA) countries using panel techniques. The results indicate that grants and remittances are...

Currency option implied volatility predicts more efficiently exchange rate volatility for the Polish zloty relative to the Czech koruna, reflecting differences in the frequency of central bank intervention in the foreign exchange market. A GARCH model shows a positive impact of the introduction...

This paper reviews the experiences of a number of European countries in coping with capital inflows. It describes the nature of the inflows, their implications for macroeconomic and financial stability, and the policy responses used to cope with them. The experiences suggest that as countries...

This paper shows that the response of inflation to external shocks is very different when the authorities target the real exchange rate than when they follow a fixed exchange rate or a preannounced crawling peg. Specifically, shocks that would have no effect on the steady-state inflation rate...

The paper focuses on distributional consequences of macroeconomic adjustment. The preferences of economic agents over the level of the real exchange rate derived from standard models are monotonic, with agents favoring either an infinitely appreciated or depreciated rate. To generate less...

Central America has received growing attention as a region that is integrating successfully into the global economy. This paper examines—among other things—the macroeconomic and fiscal implications of the Free Trade Agreement with the United States (CAFTA-DR), noting that the...

This 2004 Article IV Consultation highlights that economic activity in Mexico accelerated to 3.8 percent in the first half of 2004 over the previous year. This recovery is partly attributable to strengthening U.S. industrial production, as reflected in growth in Mexican manufactured exports of...

India’s 2005 Article IV Consultation reports that the government’s medium-term fiscal strategy is broadly appropriate, and faster implementation is crucial for its economy. India’s growth spurt provides a golden opportunity to fast-forward the government’s structural...

The authorities have made solid progress in rebuilding institutions and implementing sound economic policies, although huge challenges still remain. The IMF has been providing extensive policy advice and technical assistance to the authorities. With the help of the international community, the...

This Selected Issues paper and Statistical Appendix provides an estimate of the long-term path of Romania’s real exchange rate. The paper describes the recent history of the real exchange rate and its main determinants. A model is developed of a time-varying long-term exchange rate path,...