The author aims to empirically determine the significant factors that affect the levels of budget deficits of central governments across time and across countries. He empirically tests two prominent theories of budget deficits-the Barro (1979) tax-smoothing approach, and the still-untested...

The current economic crisis in Argentina is only partly the result of inappropriate domestic policies to cope with the recent external shocks. Years of inappropriate policies have damaged Argentina's economy. Even if no external shocks had occurred, the country would still have to change the...

Current attempts at reform in Eastern European countries raise important issues of macroeconomic management in the transition from central planning to a market or mixed economy. This paper develops simple models, reviews empirical evidence and discusses policy issues associated with traditional...

Korea is an interesting case study in long-term and short-term adjustment. The country's rate of economic growth after 1965 was high at a time of rapid, fundamental economic restructuring. It's open, export-oriented economy was exposed to oil price shocks and interest rate hikes. To keep up the...

India's growth performance has been impressive over the last two decades. But its sustainability has been in question, first with the 1991 fiscal-balance of payments crisis (BoP), and then again after 1997/98, when fiscal deficits returned to the 10 percent of GDP range and government debt grew....

Despite significant progress in economic reformthroughout the 1990s, and an exemplary development of the policymaking framework in the second part of the decade, Brazil suffered a major public debt and currency crisis in 2002. Though the political origin of the uncertainty cannot be ignored, the...

For the evaluation of macroeconomic policies Colombian authorities rely heavily, if not exclusively, on the operational framework known as the Financial Programming Model developed by the International Monetary Fund in the 1950s. Based on this static framework, the formulation of fiscal policy...

The purpose of this paper is to derive a framework for quantifying the contribution of the most important economic and policy variables to the public sector deficit. The method involves behavioral relations, identities for some key macroeconomic and sector variables and an accounting breakdown...

Fiscal adjustment is an illusion when it lowers the budget deficit or public debt but leaves the government's net worth unchanged, says the author. Conventional measures of the budget deficit largely measure the change in explicit public sector liabilities (debt). A more appropriate measure of...

For almost twenty years, Pakistan's fiscal deficit, at about 7 percent of GNP, averaged nearly twice the level for Asian countries as a whole. This paper examines the causes of Pakistan's fiscal deficits. The authors examine why, despite these deficits, the country's macroeconomic performance...