This paper looks at the economic policies and institutions needed to generate and sustain economic growth and development. It argues that policy and institutional reforms are needed in three broad areas. First, the need for a fiscal policy and overall macroeconomic framework that ensures...

Despite external shocks, Indonesia has maintained creditworthiness through swift adjustment. Indonesia's flexible economic management and clear policy signals have lent stability to the economy, in contrast to the stop and go reforms, uncertainty, and constant debt renegotiations in many high...

In the context of an empirical model, the authors examine the impact of capital flows, among other fundamentals, on long-term exchange rates in Chile. The real exchange rate and its fundamentals were found to be cointegrated during 1960-92. This cointegration allows a reinterpretation of...

This paper draws on estimates of consumption functions for 13 developing countries to analyze the effectiveness of public policy in raising saving. First, it provides evidence from time-series and panel data on how liquidity constraints affect consumption functions. This suggests that a rise in...

As a result of Turkey's currency crisis in 1994, output fell 6 percent, inflation rose to three-digit levels, the Central Bank lost half of its reserves, and the exchange rate (against the US dollar) depreciated by more than half in the first three months of the year. The author presents...

This paper evaluates Chile's stabilization policies since the early 1970s. Four episodes are examined: (a) the high inflation at the beginning of the military regime when inflation was close to 1000 percent per year; (b) the orthodox stabilization program of 1975; (c) the exchange rate-based...

This paper develops a two equation model for measuring how public sector deficits - and the way that they are financed - affect the real exchange rate, the trade balance, the current account and the level of external indebtedness. One equation relates the real exchange rate to the trade surplus...

The author uses a regime switching framework to study speculative attacks against European Monetary System (EMS) currencies during 1979-93. She identifies speculative attacks by modeling exchange rates, reserves, and interest rates as time series subject to discrete regime shifts. She assumes...

To examine whether a country's exchange rate regime has any impact on inflation and growth performance in transition economies, the authors develop an empirical framework that addresses some of the main problems plaguing empirical work in this strand of the literature: the Lucas critique, the...

The author argues that externalities in financial markets, implicit and explicit guarantees on financial transactions, and information asymmetries in financial markets that may exacerbate contagion provide a rationale for a government role in managing the risk associated with cross-border...