The need for a deeper understanding of the operation of Hong Kong's currency board arrangements was highlighted during the Asian financial crisis in 1998. A model-based approach built on hypothetical stochastic simulations would be useful for this purpose. This paper develops a new procedure of...

This study examines external and domestic influences on Latin America’s economic performance over the past decade and a half. It notes that over the past few years, macroeconomic policies have strengthened and structural reforms have been implemented. Together with a favorable external...

The weakness of the euro has been surprising given the widely-held expectation that it would be a strong currency. This paper critically examines explanations for the slide in the euro, finding that many are questionable on conceptual or empirical grounds. Two explanations are instead advanced...

The medium-term predictability of exchange rate movements is examined using three models of fundamentals: purchasing power parity, the monetary model, and uncovered interest parity. While the first two approaches yield favorable in-sample results, these largely reflect finite-sample estimation...

The economic effects of German unification are first discussed in the context of a global saving/investment model. Next, simulations of MULTIMOD are presented, suggesting for the FRG an initial increase in long-term real interest rates equal to 3/4 of a percentage point, increased output, a...

The factors that explain Japan’s external performance since the mid-1980s are controversial. While the current account surplus eventually declined following exchange rate changes in 1985-86, a widening since 1990 has led to renewed scepticism about the role of relative price movements in...

This volume brings together various analytical studies the IMF staff has undertaken on the Japanese economy, focusing on two areas of particular interest for both longer-term economic performance and recent cyclical developments. The first is Japan's saving behavior, the second is the remarkable...

This paper compares the hypothetical performance of various monetary policy rules with that of the discretionary policies actually pursued in Japan over the 1986-91 period. The results suggest that simple rules based on targeting growth in either the money supply, nominal income, or prices would...

This paper examines the evidence on asymmetries in the effects of activity on inflation. Data for the G-7 countries are found to strongly support the view that the inflation-activity relationship is nonlinear, with high levels of activity raising inflation by more than low levels decrease it. In...