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 1994 World Bank study,"Adjustment in Africa: reforms, results, and the road ahead,"assessed the extent of, and economic payoffs from, policy reform in 29 countries in sub-Saharan Africa in the mid-1980s and 1990s. Here, the authors update the results of that report with 1992 macroeconomic...

The author provides theoretical and empirical evidence of a negative association between income inequality and real exchange rates. First, he builds a theoretical model showing the transmission mechanism from inequality to real exchange rates. Second, using cross-country data, he demonstrates...

The authors investigate what has motivated the large portfolio flows to several developing countries in recent years. Using monthly data on U.S. capital flows to nine Latin American and nine Asian countries (instead of monthly reserves data), they analyze the behavior of bond and equity flows to...

Exchange-rate-based stabilization is designed to reduce inflation by using the exchange rate as the main nominal anchor. This does not necessarily mean a fixed exchange rate. A crawling peg with a low rate of depreciation or a pre-announced gradual reduction in the rate of devaluation are...