This paper addresses two puzzles of the growth literature: the failure of standard growth equations to account for slow growth in Latin America and Africa; and the surprising failure of trade to explain growth when trade liberalization appears to play a significant role. The paper shows that: i)...

This paper surveys the literature on external debt which has developed over the past decade. Initially this literature emphasized the intertemporal nature of the balance of payments, and reflected the view that balance of payments movements were an equilibrium phenomenon reflecting either...

We distinguish two attitudes towards debt. The attitude of prudent borrowers, which attempt to stabilize their debts to low levels, even in the event of a bad shock, and what we call, after Krugman, "Panglossian" borrowers, which only focus on the best of their growth prospects, and rationally...

We distinguish two types of debt crises: those that are the outcome of exogenous shocks (to productivity growth for instance) and those that are endogenously created, either by self-fulfilling panic in financial markets or by the reckless behavior of "Panglossian" borrowers. After Krugman, we...