We focus on the management of highly persistent shocks to aid flows, including PRSP-related increases in net inflows, in three quot;post-stabilization.quot; African economies with de jure flexible exchange rates. Such shocks have beneficent long-run effects, but when currency substitution is...

Since 1999, the IMF's staff has been tracking several early-warning-system (EWS) models of currency crisis. The results have been mixed. One of the long-horizon models has performed well relative to pure guesswork and to available non-model-based forecasts, such as agency ratings and private...

This paper investigates the channels through which debt affects growth, specifically whether debt affects growth through factor accumulation or total factor productivity growth. It also tests for the presence of nonlinearities in the effects of debt on the different sources of growth. We use a...

The World Bank and the IMF have adopted a debt sustainability framework (DSF) to evaluate the risk of debt distress in Low Income Countries (LICs). At the core of the DSF are empirically-based thresholds for each of five different measures of the debt burden (the “debt threshold approach”...

Among 51 countries studied, there are large regional differences in the proportion of private wealth held abroad, ranging from 3 percent in South Asia to 39 percent in Africa. Three variables explain capital flight in Africa: exchange rate overvaluation, adverse investor risk ratings, and high...

This paper provides a brief and selective overview of research on the links between macroeconomic policies and poverty reduction. Using the Human Development Index as a measure of well-being, the progress made by 100 countries during 1975-98 is presented, and its association with macroeconomic...

Analysis of firm-level panel data from three sub-Saharan African economies shows that exporting manufacturers have a total factor productivity premium of 11-28 percent. The data do not allow testing of whether these premiums are caused by selection of more efficient producers into exporting or...

Could a West African monetary union (either of the non-CFA countries, or all ECOWAS members) be an effective agency of restraint on fiscal policies? We discuss how monetary union could affect fiscal discipline and the arguments for explicit fiscal restraints considered in the European Monetary...

We reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. We show that, in a simple and standard model, increases in public investment spending in inefficient countries do not have a...

Empirical work in labour economics has focused on rent sharing as an explanation for the observed correlation in cross-sections between wages and profitability. The alternative explanation of risk sharing between workers and employers has not been tested. Using a unique panel data set for four...