The paper presents a model of optimum currency areas using a general equilibrium approach with regionally differentiated goods. The choice of a currency union depends upon the size of the underlying disturbances, the correlation between these disturbances, the costs of transactions across...

An intertemporal optimizing model of a small open economy is used to analyze how terms of trade changes affect real exchange rates and the trade balance. Temporary current, (expected) future, and permanent changes in the terms of trade are considered. The results suggest that the relationship...

This paper studies the case of Mexico to examine determinants of banking system fragility. The paper tests empirically the proposition that bank fragility is determined by bank-specific factors, macroeconomic conditions, and potential contagion effects. The methodology allows the variables that...

This paper examines the volatility and predictability of emerging stock markets. A range of measures suggests that, despite perceptions to the contrary, the volatility of emerging markets may have fallen rather than risen on average. Also, although the autocorrelations in emerging market returns...

This paper explores sources of the output collapse in Russia during transition. A modified growth-accounting framework is developed that takes into account changes in factor utilization that are typical of the transition process. The results indicate that declines in factor inputs and...

This economic journal contains theoretical and empirical analyses of varous macroeconomic issues. The studies are prepapred by IMF research staff or consultants. Subjects covered inclulde balance of payments and exchange rates, monetary systems and policies, public finances, international trade,...

This paper examines determinants and leading indicators of banking crises. The paper examines episodes of banking system distress and crisis in a large sample of countries to identify which macroeconomic and financial variables can be useful leading indicators. The best warning signs of the...

This paper argues that an important group of labor market policies are complementary in the sense that the effect of each policy is greater when implemented in conjunction with the other policies than in isolation. This may explain why the diverse, piecemeal labor market reforms in many European...

The Chilean pension reform of 1981, a shift from cm unfunded to a funded scheme, is considered to have contributed to this country’s excellent economic performance. Positive growth effects allow, in principle, a Pareto-improving shift in pension financing. This paper highlights the theoretical...

In this issue, a team of economists look at approaches to modeling the use of IMF resources in order to gauge whether the recent decline in credit outstanding is a temporary or permanent phenomenon. Era Dabla-Norris and Gabriela Inchauste examine what drives the growth of firms, with a focus on...