This paper examines the effects of capital inflows and domestic factors on Brazil’s real exchange rate. It describes the analytical framework, and then estimates a near-VAR model linking capital flows, interest rate differentials, government spending, money-base velocity, and the temporary...

This paper examines the short-run links between money growth, exchange rate depreciation, nominal wage growth, the output gap, and inflation in Chile, Korea, Mexico, and Turkey, using a generalized vector autoregression analysis. Nominal historical wage shocks are shown to have an important...

We examine the extent to which developing countries that do little, if any, research and development themselves benefit from R&D that is performed in the industrial countries. By trading with an industrial country that has a large “stock of knowledge” from its cumulative R&D activities, a...

This paper develops a model to estimate the effects of export subsidies on the supply of exports. Using data for Costa Rica over the 1980’s, it is shown that while the export subsidy scheme in operation led to an increase in exports, the direct fiscal costs of the scheme were quite large....

The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and...

This paper examines the challenges to the Cypriot pension system posed by aging, and builds the case for pension reform based on a small open economy overlapping generations model in the tradition of Auerbach-Kotlikoff. In the absence of reforms, the model suggests that tax increases needed to...

Both analytical models and casual empiricism suggest that the timing of the recessionary costs associated with inflation stabilization in chronic inflation countries may depend on the nominal anchor that is used. Under money-based stabilization, the recession occurs at the beginning of the...

The sources of macroeconomic fluctuations in sub-Saharan Africa are examined by comparing the CFA franc countries with the non--CFA franc countries. External shocks, especially terms of trade shocks, appear to have a greater influence on fluctuations of output and the real exchange rate in CFA...

In the United States and a few European countries, inventory behavior is mainly the outcome of demand shocks: a standard buffer-stock model best characterizes these economies. But most European countries are described by a modified buffer-stock model where supply shocks dominate. In contrast to...