Since Egypt's government introduced an economic reform and structural adjustment program in 1991, Egypt's Central Bank has been engaged in massive sterilized interventions to support the fixed nominal exchange rate regime. The result of this process, however, has been an increasing fiscal...

The academic and policy debate about optimal foreign exchange rate regimes for emerging economies, has focused more on the theoretical costs and benefits of possible regimes, than on their actual performance. The authors report on what can be called exchange-rate-regime-dependent differential...

Real exchange rate appreciation usually accompanies stabilization programs based on the exchange rate. One thing that causes the real exchange rate to appreciate is the capital inflows that follow liberalization of the capital account and the financial market. Capital inflows cause the exchange...

Bahrain's oil-producing economy is vulnerable to terms-of-trade shocks for oil in the short to medium run. But the country's dependence on nonrenewable hydrocarbon resources represents a more basic constraint on Bahrain's prospects for long-term economic growth and welfare. To maintain economic...

The authors analyze the impact of fiscal policy changes in openeconomies, using a rational expectation framework that nests two prototype economies: a neoclassical full-employment benchmark economy, with intertemporally optimizing consumers and firms and instant clearing of asset, goods, and...

Sustainable medium-term debt strategies are essential to adjustment programs committed to high growth and should be integrated into a consistent macroeconomic framework that encompasses debt, growth and strategies. This paper develops an analytical model that takes 2 steps. Its purpose is to...

For the past two decades, Chile has consistently pursued a course of macroeconomic stabilization and deep economic reform. But in recent years, real exchange rate appreciation and persistent moderate inflation have become key concerns for Chilean policymakers, suggesting the need for further...

Can external restraints and internal balances be reconciled in Mexico at levels of savings and investment that allow satisfactory output growth? What is the role of fiscal policy, interest rates and exchange rates in bringing such a configuration about? How sensitive are the answers to external...

Despite the current recession in many parts of the OECD, fiscal consolidation is likely in many OECD economies in the 1990s. The author asks: is fiscal consolidation in the OECD in a period of low growth a recipe for global stagnation? In particular, what effects are likely in developing...

The author sets out a methodology for analyzing episodes of high real interest rates in emerging market economies. He reviews the literature on what determines spreads in deposit rates and loan rates. Then he links the causes of interest rate spreads by explicitly modeling the incentive effect...