International aid has an ambiguous effect on the macro-economy of the recipient country. To the extent that aid raises consumer expenditure, there will be some real exchange rate appreciation and a shift of resources away from traded goods production and into non-traded goods production....

Global current account imbalances were a major subject of concern in the years before the recent financial crisis. It is shown that the expected (negative) equilibrium relationship between net foreign assets and the trade balance that had held in the previous twenty years appeared to break down...

This study assesses the response of the trade balance to exchange rate fluctuations across a large number of countries. Fixed-effects regressions are estimated for 87 countries on annual data from 1994 to 2010. The trade balance improves significantly after a real depreciation, and to a similar...

Theory suggests a significant positive relationship in long-run equilibrium between net foreign assets (NFA) as a proportion of GDP and real exchange rates. Empirical tests have ignored two issues: the large variation in cross-country trade/GDP ratios, which is likely to induce substantial...

We use new data on the timing of the transition to agriculture, developed by Putterman and Trainor (2006), to test the theory of Diamond (1997) and Olsson and Hibbs (2005) that an earlier transition is reflected in higher incomes today. Our results confirm the theory, even after controlling for...

We decisively reject the hypothesis that geographical factors influence long-run only indirectly, through the quality of institutions. The direct influence of geography on per capita incomes is robust to the inclusion of a sub-Saharan Africa dummy and other tests. We obtain our results by...

Official and four alternative regime classification schemes based on observed exchange rate behaviour are used to examine the relationship with inflation and growth in developing countries. For an identical sample of observations from 73 countries for 1984-2001, only the scheme based on parallel...

We expand Hanushek and Kimko’s (2000) analysis of the relationship between schooling quality, as measured by scores in international tests, and growth. We take account of another fifteen years of growth and approximately twice as many test score results. We treat the data first as a panel,...

We investigate the determinants of onset, duration and incidence of civil wars, and their sensitivity to different coding rules. Whatever the coding rule used, incidence of civil war is largely determined by poverty, country size, mountainous terrain and ethnic diversity. Poverty reduces the...

Using data from 1980 to 2004, we show that greater fiscal policy volatility acts as a transmission mechanism for the ‘resource curse’. Resource exports dominate political and institutional variables as determinants of fiscal policy volatility, with fiscal policy volatility being a...