Conventional aggregate models of open economies typically rule out trade in capital goods. But capital goods account for a major share of the world trade. In 1990, they represented more than 40 percent of U.S. merchandise exports and more than 30 percent of its imports. In the same year, capital...

An economy's financial integration with the outside world (the extent of capital mobility across its borders) is a key determinant of some of its most important macroeconomic properties. Yet little is known about this characteristic of many developing economies. An important stumbling block in...

Widespread private capital inflows to middle-income countries have surged over the past three years. At the same time, Brady-type debt reduction operations and domestic policy reform took place, indicators of country creditworthiness improved dramatically, and international interest rates...

External shocks, such as commodity price fluctuations, natural disasters, and the role of the international economy, are often blamed for the poor economic performance of low-income countries. The author quantifies the impact of these different external shocks using a panel vector autoregression...

Theoretically, uniform trade taxes (uniform tariff-cum-subsidies, UTCSs) are equivalent in effect to devaluations of the commercial rate in a dual exchange rate system - if one disregards smuggling and customs fraud. When either form of illegal trade is factored in, this equivalence is broken,...

The author presents and implements a methodology for assessing the success of structural adjustment based on a"fixed effect"method. He examines data for 75 countries over 11 years. Performance indicators include measures of inflation, economic growth, external balance, and physical investment....

The authors apply stochastic simulation methods to assess debt sustainability in emerging market economies and provide probability measures for projections of the external and public debt burden over the medium term. The vulnerability of public debt to adverse shocks is determined by a number of...

Most developing countries intervene extensively in financial markets, setting ceilings on interest rates and spreads and allocating much (often between half and all) of formal credit to"priority"uses. This study reviews interest rate controls and other repressive financial policies on investment...

This paper deals with the effects of disinflation on economic activity in"chronic inflation"countries -- countries with a long inflationary history above the rates in industrialized countries, where labor and capital markets are adjusted to function in the inflationary environment. The sample is...

The worldwide slowdown in growth after 1975 was a major negative fiscal shock. Slower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the negative fiscal consequences of the growth...