In this paper we develop a two country general equilibrium extension of the Stockman (1980)-Lucas (1982) equilibrium exchange rate model. This optimising framework gives us the opportunity to analyse the effect of foreign direct investment on trade and welfare of both the investor and the...

Recently, a dramatic accumulation in foreign exchange reserves has been widely observed in developing countries. This paper explores the possible long-run impacts of this trend on macroeconomic variables in developing countries. We analyze a simple open economy model where increased foreign...

Low-income countries (LIDCs) are typically characterized by intermittent and very modest access to private external funding sources. Motivated by recent developments in private flows to LIDCs this paper makes two contributions: First, it constructs a new comprehensive dataset on gross private...

This paper evaluates the empirical evidence of increasing the chances of financial crises induced by opening up developing countries to short-term capital inflows and appraises the various proposals made for mitigating the severity of financial crises. We point out that there is solid evidence...

The general objective of this study is to analyze the external debt and debt burdens of the severely indebted sub-Saharan African countries, estimate the magnitude of capital flight from them, and relate the estimate of capital flight to some macroeconomic aggregates. The study also contains...

Empirically, net capital inflows are pro-cyclical in developed countries and countercyclical in developing countries. That said, private inflows are pro-cyclical and public inflows are counter-cyclical in both groups of countries. The dominance of private (public) inflows in developed...

We study the joint behavior of external debt, international reserves, and the real interest rate based on a dynamic regime-switching small open economy model that incorporates the salient features of economic crises in emerging markets. Our model allows an assessment of the two well-known...

This paper assesses the dynamics of developing and emerging countries external debt and financial vulnerability. It is argued that, although current account positions do have a role in accumulating external liabilities, developing countries' vulnerability primarily lie in their increasing...

We investigate the impact of foreign equity and debt on the occurrence of banking crises in 61 lower-income and middle-income economies during the 1984-2010 period. We also focus on the effects of domestic institutions on banking crises and whether they mitigate or exacerbate the impact of the...

The paper shows that international government borrowing from multilateral development banks is countercyclical while international government borrowing form private sector lenders is procyclical. The countercyclicality of official lending is mostly driven by the behavior of the World Bank...