The author describes a spread-sheet planning model to help determine the government deficit consistent with a policymaker's"vector"of principal macroeconomic objectives (including real GDP growth, inflation, exchange rate, and international reserve accumulation). The model focuses on the...

This paper extends earlier work on current-price budget identities to treat constant-price flow relations. It introduces relative prices and constant-prices values for all relevant output and aggregate demand components and permits a distinction between real variables and relative price changes....

Before 1988,"orthodox"policies (fiscal discipline and tight money) failed to bring inflation down and induce a sustained economic recovery. The Mexican stabilization plan announced in December 1987 (the Pact) shows that the right combination of orthodox and"heterodox"policies (for example,...

Fiscal deficits have been at the forefront of macroeconomic adjustment in the 1980s, both in developing and developed countries. Fiscal deficits were blamed in good part for the assortment of ills that beset developing countries in the 1980s: over-indebtedness leading to the debt crisis...

The purpose of this paper is to study the impact of external shocks on an economy which was well along the path of transition to outward looking policies. The shocks in question were a deterioration in the terms of trade, slowdown in the world economy during the period 1978-82, and an increase...

The author aims to empirically determine the significant factors that affect the levels of budget deficits of central governments across time and across countries. He empirically tests two prominent theories of budget deficits-the Barro (1979) tax-smoothing approach, and the still-untested...

This paper reviews the rationale for programs and then evaluates the design, implementation, and effectiveness of Bank-supported adjustment programs anddiscusses lessons that have emerged from the analysis of adjustment problems and programs. In countries that are experiencing acute...

The paper reviews alternative definitions of the non-financialpublic sector deficit. Important points giving rise to different definitions are the problem of foreign exchange losses, the appropriateness of including net government lending to the private sector and the distinction between nominal...

To improve the Bank's macroeconomic modeling capabilities, a continuum of macro models referred to as RMSM-X and RMSM-XX are being developed. These models share a common accounting framework that ensures economic consistency among economic sectors. This paper shows how to specify the budget...

Egypt has been able to escape high inflation by depleting its stocks of creditworthiness, money illusion, and enforceable foreign-exchange controls. These nonrecoverable assets are quickly becoming extinct and the economy is on an unsustainable path. The authors present a short- and medium-term...