In the current period of devaluation pessimism, devaluation is often seen as an instrument to accommodate inflation instead of one to change the real exchange rate and support external balance. The authors argue that such pessimism has in some cases gone too far. The real exchange rate is an...

Drawing on conditionality and implementation information for 184 World Bank adjustment loans to 62 countries during the 1980s, the authors examine the macroeconomic underpinnings of Bank supported adjustment programs. After looking at recent experience with macroeconomic conditionality they...

The main objective of this paper was to measure the importance of labor market distortions in explaining the marked tendency to real exchange rate overvaluation and the relatively low effectiveness of devaluation in Latin America. The main finding is that distortions in the formal labor market...

The authors analyze the structure of public deficits in Chile, distinguishing between consolidated nonfinancial public deficits and quasifiscal losses of the Central Bank - focusing on the determinants and sustainability of the deficits. In the framework of an estimated portfolio model, they...

For most of the 13 African members of the CFA Franc Zone, the 1980s have been a decade of slow or negative growth in per capita gross domestic product, worsening balance of payments, debt crises, financial crises declining competitiveness, and an apparent failure to adjust to the changed...

The salient characteristics of emerging market economies coupled with the increasing adoption of inflation targeting in these countries has stimulated much debate about the role of the exchange rate in inflation targeting regimes. The authors aim at shedding more light on this issue by...

The management of fiscal deficits and their financing in Colombia has been generally sound. This paper shows how episodes of loose fiscal policy have been minor compared to other Latin American countries. The near-crisis of the early 1980s was addressed in a timely way through a sharp fiscal...

At the center of the controversy about effectiveness of"adjustment with growth"loan packages from the IMF and the World Bank has been the heavy emphasis on real exchange rate depreciation as a way to restore external balance and elicit a positive supply response. The authors find that adjustment...

Mexico's growth rate began to plummet at roughly the same time that its public investment expenditures declined. That decline also appears to coincide with a slowdown in the growth of infrastructure capital in the electricity, transport, and communications sectors. Because of these parallel...

In 1985, Mexico shifted to a growth strategy based on private investment and exports rather than on import substitution and public sector investment. The policy implications of this study, are that to increase investment, Mexico should follow policies aimed at reducing investment adjustment...