A puzzle in international macroeconomics is that observed real exchange rates are highly volatile. Standard international real business cycle (IRBC) models cannot reproduce this fact. We show that TFP processes for the U.S. and the "rest of the world," is characterized by a vector error...

Recent empirical research documents that an exogenous rise in government purchases in a given country triggers a persistent depreciation of its real exchange rate - which raises an important puzzle, as standard macro models predict an appreciation of the real exchange rate. This paper presents a...

This 2007 Article IV Consultation highlights that Belarus’s centralized economy grew rapidly over the past few years, enhancing social development. The state redistributed large and growing terms-of-trade gains stemming from favorable Russian energy pricing across the economy, boosting...

This 2007 Article IV Consultation highlights that Indonesia’s economic performance has been strong since the last Article IV Consultation. Supported by sound policies and a favorable external environment, output has grown strongly, inflation has stabilized, and international reserves have...

Trinidad and Tobago showed strong economic performance led by the buoyant energy sector. Executive Directors welcomed the robust economic activity, and the decline in public debt and external reserves. Directors stressed the need for strong macroeconomic and structural policies to enable the...

This 2009 Article IV Consultation highlights that Malawi’s macroeconomic performance has improved significantly over the past two years, and the country’s agricultural-based economy has weathered the global economic storm relatively well. Good weather and the distribution of...

This paper examines Romania’s external stability risks. Recent Romanian data indicate high increases in real wages, not matched by comparable productivity gains. Both the government and the National Bank of Romania (NBR) have highlighted the importance of a responsible and stabilizing...

This paper examines the external sustainability and competitiveness of Benin’s economy. Balance of payments flows suggest Benin’s external position is sustainable. Large trade and current account deficits are comfortably financed by inflows through the capital and financial...

This paper estimated the output gap in Lithuania using three different methodologies—an HP filter, a panel regression, and a production function. This study examines how the levels of the current account deficit and the real exchange rate in Lithuania compare with estimates of their...

This Selected Issues paper assesses The Gambia’s external competitiveness by reviewing developments in several indicators, ranging from exchange rate-based indices to survey-based assessments of the investment climate. The paper reviews the evolution of several multilateral and bilateral...