This paper develops a two equation model for measuring how public sector deficits - and the way that they are financed - affect the real exchange rate, the trade balance, the current account and the level of external indebtedness. One equation relates the real exchange rate to the trade surplus...

In the past, the Thai government usually ran a budget deficit. In recent years, the deficit has become a surplus. A continued high growth rate in the last three years produced an unexpected rise in tax revenues, and the growth of public spending was effectively controlled. The government has...

The development of government bond markets and, in particular, their currency composition have recently received much interest, partly because of their relation with financial crises. The authors study the determinants of the size and currency composition of government bond markets for a panel...

Unsustainable fiscal deficits were the chief reason for the inflation that has persisted in Eastern Europe since 1989. Deficits need to be cut back, but by how much for a given inflation target? The authors develop a simple framework for debt, the deficit, and inflation to study the interactions...

The authors analyze the structure of public deficits in Chile, distinguishing between consolidated nonfinancial public deficits and quasifiscal losses of the Central Bank - focusing on the determinants and sustainability of the deficits. In the framework of an estimated portfolio model, they...

Although Egypt's budget deficit is far above the level found in other low-middle-income countries, the inflation rate in Egypt has never been very high. This is because the country has managed to finance these budget deficits by resorting to an inflation tax that, at 11 percent of GDP in 1987,...

The paper assesses the contribution of key factors associated with external imbalances in the Eurozone through the estimation of a panel-data vector autoregressive model over 1975-2011. Growth fluctuations, initially associated with demand booms triggered by unusually low interest rates and...

Over the past 15 years, gross inflows to industrial and developing countries have enjoyed a wild ride. After reaching record highs in the run-up to the global financial crisis, they collapsed dramatically in 2008-09. As signs of global recovery reappeared, capital inflows resumed although at...

In May 2013, Federal Reserve officials first began to talk of the possibility of tapering their security purchases. This tapering talk had a sharp negative impact on emerging markets. Different countries, however, were affected very differently. This paper uses data on exchange rates, foreign...

The"tapering talk"starting on May 22, 2013, when Federal Reserve Chairman Ben Bernanke first spoke of the possibility of the U.S. central bank reducing its security purchases, had a sharp negative impact on emerging markets. India was among those hardest hit. The rupee depreciated by 18 percent...