Sustainable medium-term debt strategies are essential to adjustment programs committed to high growth and should be integrated into a consistent macroeconomic framework that encompasses debt, growth and strategies. This paper develops an analytical model that takes 2 steps. Its purpose is to...

For the past two decades, Chile has consistently pursued a course of macroeconomic stabilization and deep economic reform. But in recent years, real exchange rate appreciation and persistent moderate inflation have become key concerns for Chilean policymakers, suggesting the need for further...

Can external restraints and internal balances be reconciled in Mexico at levels of savings and investment that allow satisfactory output growth? What is the role of fiscal policy, interest rates and exchange rates in bringing such a configuration about? How sensitive are the answers to external...

Despite the current recession in many parts of the OECD, fiscal consolidation is likely in many OECD economies in the 1990s. The author asks: is fiscal consolidation in the OECD in a period of low growth a recipe for global stagnation? In particular, what effects are likely in developing...

There is a conventional perception that high real interest rates are bad for economic growth. However, the authors show that close examination of the experience over the last 40 years undermines the existence of such a relationship. For much of the 1950-79 period, expost real interest rates were...

The author sets out a methodology for analyzing episodes of high real interest rates in emerging market economies. He reviews the literature on what determines spreads in deposit rates and loan rates. Then he links the causes of interest rate spreads by explicitly modeling the incentive effect...

The authors empirically study the sensitivity of local interest rates to international interest rates and how that sensitivity is affected by a country's choice of exchange rate regime. To establish the empirical regularities, they use a reduced-form empirical approach to compute both panel and...

Between 1990 and 2001 the Argentine peso appreciated by 80 percent in real terms, and its overvaluation has been singled out as one of the main suspects in the debate on the causes of the Argentina collapse of late 2001. This paper assesses the degree of real misalignment in Argentina over the...

The literature on speculative attacks has been given new impetus by the collapse of the European currency arrangements beginning in 1992, by the Mexican peso crisis and after-effects in 1994, and most recently by speculative attacks across Asia. One stand of this literature stresses the...

The author examines the effect of fiscal adjustment on the real exchange rate. The argument is made that the direction and extent of that effect depends on the way fiscal adjustment is carried out. If a fiscal deficit is reduced mainly by reducing total government spending, the effect on the...