Tax or debt financing of a given rate of government expenditures would, according to the well-known Ricardian equivalence proposition, have equivalent effects on aggregate demand. Among the sources of a deviation from equivalence is the possibility that the government and the private sector have...

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...

An endogenous growth model with heterogeneous agents is analyzed to show that “human capital flight” or “brain drain” can lead to a permanent reduction in income and growth of the country of emigration relative to the country of immigration. Convergence between the two is therefore...

Pakistan has experienced high fiscal deficits for over two decades. The accumulation of debt over this period implies that a substantial adjustment will be required to attain a sustainable fiscal position over the medium term. By simulating an estimated macroeconomic model for Pakistan, this...