This paper offers an empirical evaluation of the output contribution of infrastructure. Drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production...

Academics and policy makers have long considered an adequate supply of infrastructure services to be essential for economic development. This paper reviews recent theoretical and empirical literature on the effects of infrastructure development on growth and income distribution. The theoretical...

The impact of permanent real depreciation on a country's capital stock is uncertain. Whether total capital stock rises or falls depends on how depreciation affects aggregate demand, the real interest rate, and especially the import content of capital goods. In the long run, the capital stock can...

The Argentine crisis has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. The authors provide an encompassing assessment of the role of these and other ingredients in the recent macroeconomic collapse. They...

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...

Capital flows to developing countries are small and take mostly the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk and sovereign risk. This model generates a set...

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...

In the 1990s macroeconomic policies improved in a majority of developing countries, but the growth dividend from such improvement fell short of expectations, and a policy agenda focused on stability turned out to be associated with a multiplicity of financial crises. The authors take a...

The authors empirically review and analyze the link between income distribution and aggregate savings. Recent research has focused on the impact of income inequality and growth. Less attention has been paid to the link between inequality and savings. Once the conventional representative-agent...

The transmission of shocks and policy changes depends crucially on the structure of the economy. The authors analyze the impact of two classes of external shocks in open economies, using a rational-expectations framework that tests three prototype economies: (1) a neoclassical, full-employment...