Limited fiscal space limits Djibouti's ability to meet the Millennium Development Goals and improve the living conditions of its population. Djibouti's fiscal structure is unique in that almost 70 percent of government revenue is denominated in foreign currency (import taxes, foreign aid grants,...

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...

The authors investigate the links between banking crises, and exchange rate regimes, using a comprehensive data set that includes developed, and developing countries over the last two decades. In particular, they examine whether the choice of exchange rate regime affects the likelihood, cost,...

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...

The authors study whether capital controls affect the link between domestic and foreign stock market prices and interest rates. To examine the characteristics of international market integration and the effects of capital controls in the short and long run, they apply band-pass filter techniques...

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...

The authors analyze the response of private and public investment to external shocks, macroeconomic adjustment, and structural reform in three sets of countries: (a) countries that pursued structural reform and liberalization in Latin American in the 1970s (Chile) or the 1980s (Mexico and...

The remarkable surge in private capital flow to developing countries since 1990 has greatly facilitated their rapid growth, at a time when OECD countries have been in, or passed through, recession. The importance of these flows to the current account of severallarge developing countries has...