We examine the determinants of external crises, focusing on the role of foreign liabilities and their composition. Using a variety of statistical tools and comprehensive data spanning 1970-2011, we find that the ratio of net foreign liabilities (NFL) to GDP is a significant crisis predictor, and...

This paper assesses the vulnerability of Latin American and Caribbean (LAC) economies to external crises. It shows that while the average LAC economy has made significant strides to reduce vulnerability to crises to its historical minimum, there is still considerable room for improvement,...

The COVID-19 pandemic, the health protection measures, and the policies meant to limit the economic effects of the disease have affected the world's economies on multiple levels, the international trade being one of the most seriously influenced domains. The paper1 aims to highlight the effects...

This paper explores the empirical determinants of external crises on a world panel dataset of 62 countries over the fifty-year period 1970-2019 and estimates their risk trade-offs with the aim of informing macrofinancial prudential policies. The determinants include countries' external balance...

Current account deficit has become a common phenomenon in both developed and developing countries. Although there is a plethora of perspective towards the current account deficit-economic growth nexus, there is still no consensus on the impact and direction of causality. This study seeks to...

We use stochastic optimal control-dynamic programming (DP) to derive the optimal foreign debt/net worth, consumption/net worth, current account/net worth, and endogenous growth rate in an open economy. Unlike the literature that uses an Intertemporal Budget Constraint (IBC) or the Maximum...

'Global imbalances' are almost universally regarded as a disequilibrium phenomenon. Caballero, Farhi, and Gourinchas (2008) challenge this notion with their dynamic general equilibrium model of global imbalances. The authors conclude that current account deficit nations need not worry about...

This study aims to evaluate the public debt sustainability of Pakistan using the debt sustainability analysis (DSA) framework and fiscal reaction function (FRF). For the empirical analysis, it uses relevant important macroeconomic variables, such as public debt, external debt, primary balance,...

This paper studies the impact of the state-dependent risk of a government default on the correlation of the scal balance and current account. We use a small open economy model where nonlinear risk premia arise endogenously when the government operates close to its scal limit, i.e. the maximum...