For almost twenty years, Pakistan's fiscal deficit, at about 7 percent of GNP, averaged nearly twice the level for Asian countries as a whole. This paper examines the causes of Pakistan's fiscal deficits. The authors examine why, despite these deficits, the country's macroeconomic performance...

The paper presents a general equilibrium framework for short-run macroeconomic analysis in a developing country context where controls on interest rates and foreign exchange restrictions lead to the emergence of informal financial markets. The complexity of the model precludes an analytical...

This paper uses a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy that maximizes a social welfare function U(s, Y) that depends on...

While the quot;dependent economyquot; approach has been used extensively in theoretical work on developing countries, there is very little empirical analysis of it available in the literature. This paper specifies a dependent economy model which incorporates several developing-country features,...

The paper develops a small dynamic macroeconomic simulation model for a representative developing country which relies on familiar macroeconomic theory and in which expectations are formed rationally. The model is useful for the analysis and simulation of important policy questions in a...

The degree of capital mobility in developing economies is seldom estimated, even though it is widely recognized to be an important element in determining the effects of stabilization policies. Instead, an economy is assumed to be open or closed mainly on grounds of analytical convenience. This...

The dynamic responses of a developing economy to a variety of policy and external shocks are studied using an empirical macroeconomic model which embodies rational expectations, perfect capital mobility, and import rationing. These features, which are relatively new in developing-country...

A small macroeconomic model based on familiar theoretical considerations is developed and estimated using data from 31 developing countries. Efficient estimation techniques are used to control for country heterogeneity under the assumption of rational expectations. The estimates and the test...

Over the last two decades a number of cross-country empirical studies have been undertaken to assess whether IMF-supported adjustment programs have led to an improved balance of payments and current account balance, lower inflation, and higher growth. These studies use a variety of methodologies...