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...

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...

Real wage declines have been common in the public sector in many countries over substantial periods of time. In several cases, such wage reductions have coincided with declines in the efficiency of the public sector. In a simple analytical framework, it is shown that higher wage levels alter the...

This paper analyzes the economic determinants of developing country creditworthiness indicators for over 60 developing countries for the period from 1980 to 1993. Our results indicate that economic fundamentals--the ratio of nongold foreign exchange reserves to imports, the ratio of the current...

Capital flight from developing countries has begun to receive a great deal of attention in recent years. At the same time that many of these countries were borrowing heavily in the international capital markets, private residents were accumulating foreign assets. Indeed, some observers have...

An optimizing growth model for a highly indebted small open economy is constructed and analyzed. An important innovation in the model is the incorporation of sovereign risk through the specification of an upward-sloping foreign debt supply function. The model is used to examine the interaction...

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...

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...

This paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparisons as well as historical and other relevant standards. The paper analytically explores and empirically tests a number of hypotheses to explain the perceived...

This paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparisons as well as historical and other relevant standards. The paper analytically explores and empirically tests a number of hypotheses to explain the perceived...