Standard one-sector growth models often have the counterfactual implication that economies with access to similar technologies will converge to a common balanced growth path. The authors propose an elaboration of the Diamond model that permits multiple, locally stable stationary states. This...

Stabilization programs in open economies typically consist of two stages. In the first stage, the rate of currency devaluation is reduced, but the fiscal adjustment do es not eliminate the fiscal deficit that causes growth of debt and lo ss of reserves, making a future policy change necessary....

Standard models of policy credibility, defined as the expectation that an announced policy will be carried out, emphasize the preferences of the policymaker and the role of tough policies in signaling toughness and raising credibility. Whether a policy is carried out, however, will also reflect...