To update a famous old statistic: a political leader in a developing country is twice as likely to lose office in the 6 months following a currency crash as otherwise. This difference, which is highly significant statistically, holds regardless whether the devaluation takes place in the context...

Summary of key points: A fixed exchange rate and a flexible exchange rate each have its own advantages. A country should have the right to choose the regime best suited to its circumstances. Nevertheless, the de facto dollar peg may now have outlived its usefulness for China. China's economy has...

The multilateral regime to address the problem of global climate change is manifest in the Kyoto Protocol, negotiated in that city in 1997, and likely soon to enter into force. The multilateral regime to address international trade is manifest in the World Trade Organization, established in...

Optimum currency area theory says that trade patterns and cyclical correlations are important criteria for whether a country should join a monetary area such as EMU. But these criteria are endogenous. Recent econometric estimates suggest that currency unions have far greater effects on trade...

Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some believe that openness raises vulnerability to foreign shocks, while others believe that it makes adjustment to crises...

What explains the economic success of Mauritius, a top performer among African countries? How did it develop a manufacturing sector and how has it managed to respond well to new external shocks? This paper draws on the history of the island, the writings of foreign economists, the ideas of...

Start from three premises: (1) Global Climate Change is a genuine problem; (2) the Kyoto Protocol constitutes the only multilateral framework we have to address it; and (3) the Protocol is inadequate, particularly with regard to incomplete coverage across countries (no participation of US or...

The overshooting theory of exchange rates seems ideally designed to explain some important aspects of the movement of the dollar in recent years. Over the period 1981-84, for example, when real interest rates in the United States rose above those of its trading partners (presumably due to shifts...

This comment discusses the issues regarding the scale of conditional finance offered by the International Monetary Fund in recent rescue packages, and the related issues regarding a true lender of last resort. It reviews critiques of the Fund?s performance in recent emerging-market crises,...