We develop a model in which countries can protect themselves against shocks by subscribing to a credit union that shares the key features of the International Monetary Fund, or by self-insuring through accumulating reserves. We assess the impact of the increasing heterogeneity of the Fund's...

Since February 2003 a number of debtor countries have issued bonds with collective action clauses (CACs) under New York law - a development welcomed by the official sector as tangible progress towards more orderly crisis resolution. Not all of these countries, however, have opted for the same...

Capital flows to emerging market economies have occurred in cycles, with booms in lending often followed by financial crises. Economic theory, though, has had little to say on the optimal rate at which capital should flow. In this paper a model due to Barro, Mankiw and Sala-i-Martin is extended...

This paper presents a model to explain how IMF programmes can catalyse private capital flows following a financial crisis, a concept that was at the heart of the IMF's strategy for dealing with capital account crises in the late 1990s. In the model, the IMF lends funds below the prevailing...

Over the past few years there has been an active debate among policy-makers on appropriate mechanisms for restructuring sovereign debt, particularly international bonds. In this paper a simple theoretical model is developed to analyse the merits of these proposals. The analysis suggests that...

Payments standstills have been suggested as a tool for the resolution of financial crises in emerging markets economies. A simple model is developed here to examine the implications of standstills for yields and the maturity structure of debt. An emerging market country chooses to sell short and...

The determinants of public debt dynamics – real interest rates, the real exchange rate, output growth and the primary fiscal balance – are typically more volatile in emerging market economies than in industrialised countries. Capital markets also typically demand higher interest rates from...