In recent years there has been substantial theoretical and empirical work on the role that financial markets play in fostering economic growth and development. This paper provides a selective review of the literature, as well as new empirical evidence on the relationship between financial...

The paper uses finance and agency theory to establish two main propositions: First, that the conditionality attached to adjustment programs supported by the IMF is justified. Second, that ownership of programs by the borrowing country is crucial for their success. Hence, since both IMF...

There is now a substantial theoretical literature arguing that inflation impedes financial deepening. Furthermore, it has been hypothesized that the relationship is a nonlinear one, in that there is a threshold level of inflation below which inflation has a positive effect on financial depth,...

Movements in global capital during the late 1990s and the greater emphasis on price stability led many countries to abandon fixed exchange rate regimes and to design institutions and monetary policies to achieve credibility in the goal of lowering inflation. Such recent developments have brought...

The conventional growth-accounting approach to estimating the sources of economic growth requires unrealistically strong assumptions about the competitiveness of factor markets and the form of the underlying aggregate production function. This paper outlines a new approach utilizing...

This paper examines the relative demands for domestic and foreign currency deposits by residents of developing countries. A dynamic currency substitution model that incorporates forward-looking rational expectations is formulated and then estimated for a group of ten developing countries. The...

China has been growing at a spectacular rate in recent years, enabling per capita incomes to almost quadruple in only the last decade and a half This paper identifies the sources of economic growth in China from 1953 to 1994. While capital accumulation played an important role in China’s...

This paper examines the extent to which there has been convergence in real per capita incomes across developing countries during the last two decades. In the analysis particular emphasis is placed on the separate roles played by private and public sector investment in determining both the extent...

Using a simple dependent - economy framework, this paper outlines the links between the equilibrium real exchange rate and some of its fundamental exogenous determinants, mainly terms of trade movements and commercial policy changes. Drawing on existing studies of trade flows in developing...

There is little empirical research on whether Balassa-Samuelson effects can explain the long-run behavior of real exchange rates in developing countries. This paper presents new evidence on this issue based on a panel data sample of 16 developing countries. The paper finds that the...