The neoclassical theory of project evaluation is based on models in which agents discount the future at a constant exponential rate. But there is strong empirical evidence that people discount the future hyperbolically, applying larger annual discount rates to near-term returns than to returns...

The success with which middle-income indebted developing countries have gained access to private international finance in the 1990s is a tribute to their own domestic economic performance, international policy in dealing with the debt crisis of the 1980s, and innovation in international...

Between 1987 and 1990, Mexico's current account and trade balance deteriorated by more than US$10 billion. Higher investment accounts only partly for this deterioration; nor can it be attributed to the public sector. By conventional (unadjusted) measures of private saving - the total investment...

The author proposes and estimates a microeconomic investment model to determine the relative importance of three explanations for Mexico's investment decline in the early 1980s: the decline in oil prices; the termination of capital inflows; and the effects of debt overhang and uncertainty. He...

Many private infrastructure projects mix regulation that subjects the private company to considerable risk, a government or regulator that is reluctant to see the company go bankrupt, and high leverage on the part of the company. If all goes well, equityholders make a profit, debtholders are...

Basis risk is the risk attributable to uncertain movements in the spread between yields associated with a particular financial instrument or class of instruments, and a reference interest rate over time. There are seven types of basis risk: Yields on 1) Long-term versus short-term financial...

The quest for efficiency underlies the reform efforts of the socialist economies, but job security and overemployment (redundant jobs) still characterize these economies. The author argues that reforming socialist economies have maintained job security not through planning but mainly through a...

Previous approaches to credit policy in the stabilization and adjustment of developing countries have emphasized either the role of the availability of credit or the role of its price - that is, the interest rate. The authors argue that effective credit policy in developing countries must take...

The author makes a case for improving capacity in developing countries to monitor and analyze data on private capital flows, especially portfolio investment flows (through both debt and non-debt instruments). He surveys recent economic literature and identifies unanswered international...

The authors argue that the recent Asian currency crisis was caused by large prospective fiscal deficits associated with implicit bailout guarantees to failing banking systems. They articulate this view using a simple dynamic general equilibrium model, whose key feature is that a speculative...