Issues relating to the evolution of exchange rate regimes are examined. Empirical regularities concerning the variation over time of real and monetary disturbances and cross-country inflation differentials are first discussed. The paper then develops a model that incorporates these regularities...

An optimizing model of dual exchange markets that are incompletely separated owing to the presence of fraudulent transactions is analyzed. The model is used to examine the implications of unanticipated and permanent changes in the commercial exchange rate and government spending. It is shown...

An optimizing growth model for a highly indebted small open economy is constructed and analyzed. An important innovation in the model is the incorporation of sovereign risk through the specification of an upward-sloping foreign debt supply function. The model is used to examine the interaction...

The macroeconomic implications of trade reform in the presence of capital account restrictions are discussed. Such restrictions are modeled by recognizing the prior constraints on free currency convertibility that are imposed under a multiple exchange rate system. The results indicate that the...

Recent developments in the theoretical and empirical analysis of balance of payments crises are reviewed. A simple analytical model highlighting the process leading to such crises is first developed. The basic framework is then extended to deal with a variety of issues, including alternative...