The dynamics of the collapse of a crawling exchange rate in the presence of an explicit link between the fiscal deficit and domestic credit is investigated. Such an exchange rate regime is generally characterized by two potential steady-state equilibria, which introduce an ex ante indeterminacy...

This paper provides an overview of the recent theoretical and empirical research on herd behavior in financial markets. It looks at what precisely is meant by herding, the causes of herd behavior, the success of existing studies in identifying the phenomenon, and the effect that herding has on...

The paper examines the link between net capital flows and international reserves emphasizing the external financing of reserve accumulation in the context of increasing international financial integration. The paper finds that the effect of net capital flows on reserve accumulation has shifted...

This paper provides an overview of the recent theoretical and empirical research on herd behavior in financial markets. It looks at what precisely is meant by herding, the causes of herd behavior, the success of existing studies in identifying the phenomenon, and the effect that herding has on...

The focus of this analysis is on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated,...

Staff Papers has, since its inception in 1950, been an important vehicle for the dissemination of research done by staff of the IMF. The paper discusses three areas in which articles published in Staff Papers up until the 1970s made major contributions to the literature in international...

International policy coordination is generally considered to be made less likely--and less profitable--by uncertainty about how the economy works. This paper offers a counter example, in which investors' increased uncertainty about portfolio preference makes coordination more beneficial. Without...

The pros and cons of institutionalized constraints limiting the freedom of national budgetary policies within an economic and monetary union in Europe are reviewed. The issue is approached from three angles: the influence of EMU on budget discipline, intergenerational equity and intertemporal...

Expansionary fiscal policies in the United States in the early 1980s and contemporaneous fiscal restraint in the Federal Republic of Germany and Japan constituted important shifts in fiscal positions among industrial economies. The international economy was simultaneously characterized by...

This paper describes the construction and use of a small macroeconomic model, MINIMOD, of the United States and its major industrial trading partners. The goal is to have a readily understandable and transparent model of manageable size that is suitable for policy analysis. Consequently, an...