The impact of permanent real depreciation on a country's capital stock is uncertain. Whether total capital stock rises or falls depends on how depreciation affects aggregate demand, the real interest rate, and especially the import content of capital goods. In the long run, the capital stock can...

The increase in trade, the increasing internationalization of production and the improvements in communications, together with the legalization of foreign currency instruments in a growing number of countries, have led to a de facto liberalization of the capital account. In line with the greater...

In considering how the euro will affect Sub-Saharan Africa, the authors examine the transmission channels through which the euro could affect economies in the region. They examine the risks and opportunities the euro presents for Sub-Saharan African countries. They especially examine the effects...

Mexico's economic crisis in December 1994 gave renewed importance to the issue of"spillover"or"contagion"effects in other emerging market economies (and their sensitivity to events in larger countries in the region.) They focus on how small open economies are affected by their neighbors'ecomomic...

The authors examine possible monetary policy strategies for Latin America that may help lock in the gains the region attained in the fight against inflation in the 1990s. Instead of focusing the debate about the conduct of monetary policy on whether the nominal exchange rate should be fixed or...

The development of government bond markets and, in particular, their currency composition have recently received much interest, partly because of their relation with financial crises. The authors study the determinants of the size and currency composition of government bond markets for a panel...

The Argentine crisis has been variously blamed on fiscal imbalances, real overvaluation, and self-fulfilling investor pessimism triggering a capital flow reversal. The authors provide an encompassing assessment of the role of these and other ingredients in the recent macroeconomic collapse. They...

The author defines a financial crisis as a disruption in financial markets in which adverse selection and moral hazard problems become much worse, so that financial markets are unable to efficiently channel funds to those who have the most productive investment opportunities. As financial...

In the McKinnon and Shaw analysis, financial liberalization is defined to mean the establishment of higher interest rates that equate the demand for, and the supply of, savings. It expresses the views that higher interest rates will lead to increased savings and financial intermediation as well...

Bahrain's oil-producing economy is vulnerable to terms-of-trade shocks for oil in the short to medium run. But the country's dependence on nonrenewable hydrocarbon resources represents a more basic constraint on Bahrain's prospects for long-term economic growth and welfare. To maintain economic...