Previous work has investigated whether political instability has a negative effect on economic growth, with mixed results, largely because political instability can take various forms. Using synthetic control methodology, which constructs a counterfactual in the absence of political instability,...

Shifts in the bilateral real exchange rate between the countries of migrants' origin and destination alter the real value of international remittances in origin currency relative to their real value in destination currency. Theoretical models predict a response in the form of some adjustment in...

Previous research on inflation targeting (IT) has focused on high-income countries (HICs) and emerging market economies (EMEs). Only recently has enough data accumulated for the performance of IT in low-income countries (LICs) to be assessed. We show that IT has not so far been as effective in...

Previous research has found that the relationship between fiscal deficits and inflation is conditional on income levels: deficits tend to be inflationary in developing countries but not in advanced economies. We show that within low-income countries (LICs) the relationship is again conditional:...

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....

For developing countries, it is shown that different exchange rate classification schemes paint a very inconsistent picture. Disagreements between alternative schemes are as great as with the official scheme. Only the official scheme shows a trend towards floating.