The authors study whether capital controls affect the link between domestic and foreign stock market prices and interest rates. To examine the characteristics of international market integration and the effects of capital controls in the short and long run, they apply band-pass filter techniques...

Exchange-rate-based stabilization is designed to reduce inflation by using the exchange rate as the main nominal anchor. This does not necessarily mean a fixed exchange rate. A crawling peg with a low rate of depreciation or a pre-announced gradual reduction in the rate of devaluation are...

The authors analyze the response of private and public investment to external shocks, macroeconomic adjustment, and structural reform in three sets of countries: (a) countries that pursued structural reform and liberalization in Latin American in the 1970s (Chile) or the 1980s (Mexico and...

The remarkable surge in private capital flow to developing countries since 1990 has greatly facilitated their rapid growth, at a time when OECD countries have been in, or passed through, recession. The importance of these flows to the current account of severallarge developing countries has...

Analyzing new data, the authors find that the general trend toward increased use of foreign-currency-denominated bank deposits in emerging markets has continued, despite declines in a few countries. Their analysis of the new data suggests that a sizable fraction (about half, on average) of funds...

Since Egypt's government introduced an economic reform and structural adjustment program in 1991, Egypt's Central Bank has been engaged in massive sterilized interventions to support the fixed nominal exchange rate regime. The result of this process, however, has been an increasing fiscal...

Why do firms and banks hold foreign currency denominated liabilities? The authors argue that foreign currency debt, by altering the effect of a devaluation on output, has a disciplining effect when the Central Bank's objectives differ from the social optimum. However, under imperfect...

Recent developments in a number of emerging economies have heightened interest in the relationship between macroeconomic management and financial regulation, in an environment of open capital accounts and large-scale movements of private capital. The authors analyze the Turkish experience with...

Since 1989, private capital flows to a select group of developing countries have increased sharply, but developments in 1994 have caused concern about the sustainability of those flows. Several highly indebted developing countries that are implementing reform are concerned that a generalized...

In recent years, two classes of computable general equilibrium (CGE) trade models have been used to investigate external sector policies: single country and and multicountry trade models. The authors examine the treatment of exports and imports in recent single country CGE models of small...