Recent research has found that current account balances under flexible regimes seem to be no less persistent than under fixed regimes. This result appears to undermine Milton Friedman's well known — and commonly accepted — claim that flexible exchange rates facilitate the adjustment of...

This paper revisits the link between the nominal exchange rate regime and inflation, based on a sample of 145 emerging market and developing countries (EMDCs) over the period 1980-2010. We contend that, just as a de jure peg that is not backed by a de facto peg will have little value, de facto...

Export firms are often assumed to stabilize destination market prices in the face of nominal exchange rate changes in order to protect market share. We show that standard tests of such pricing to market fail to discriminate against the alternative hypothesis of menu costs. As a case study, we...

This paper presents two approaches to modeling the use of IMF resources in order to gauge whether the recent decline in credit outstanding is a temporary or a permanent phenomenon. The two approaches - the time series behavior of credit outstanding and a two-stage program selection and access...

The paper considers gains from international economic policy coordination when there is uncertainty concerning the functioning of the world economy, but also learning about the quot;truequot; model on the part of policymakers. The paper reports estimates of plausible alternative versions of a...

This paper considers the design and desirability of rules for the international coordination of macroeconomic policies in a world characterized by model uncertainty. It is argued that the presence of model uncertainty, far from rendering cooperation unattractive, may actually provide a...

This paper considers the problem of allocation of investment for a debtor country that faces a ceiling on the amount of foreign debt it can accumulate. It shows that it is optimal for the debtor country to create a more open economy by favoring investment in the export sector over investment in...

This paper examines whether expansionary credit policy can help sustain output growth in transition economies, with particular reference to Ukraine`s experience since 1992. We find that, while real credit growth is indeed associated with higher output growth, an increase in the growth rate of...

Following very high inflation rates at the beginning of the reform process, most transition countries have succeeded in lowering their inflation to more moderate rates. Inflation rates in the Baltics, Russia, and other countries of the former Soviet Union are now typically in the range of 10-60...