Are natural resources a blessing or a curse? The authors present a model in which natural resources have a positive effect on the level of income and a negative effect on its growth rate. The positive and permanent effect on income implies a welfare gain. There is a growth effect stemming from a...

The author reviews the theory and evidence on inflation and growth and provides additional empirical evidence for a large cross-section of countries. The evidence, he reports, suggests a robust negative relationship between inflation and growth. He argues that inflation limits growth mainly by...

Empirically, traditional money demand equations are frequently characterized by periods of"missing money", unstable parameters, and autocorrelated errors. The common practice to solve these problems consists of changing the specification of the regressions once the shifts (which are usually...

Traditional specifications of money demand have commonly been plagued by persistent overprediction, implausible parameter estimates, andhighly autocorrelated errors. The authors argue that some of these problems stem from the failure to account for the impact of financial innovation. They...

This paper draws on estimates of consumption functions for 13 developing countries to analyze the effectiveness of public policy in raising saving. First, it provides evidence from time-series and panel data on how liquidity constraints affect consumption functions. This suggests that a rise in...

This paper shows how the industrial structure and performance changed after Chile's dramatic trade liberalization. A comparison of the 1967 and 1979 censuses shows little improvement in productivity overall, but these figures don't separate the effects of trade liberalization from the effects of...

This paper evaluates Chile's stabilization policies since the early 1970s. Four episodes are examined: (a) the high inflation at the beginning of the military regime when inflation was close to 1000 percent per year; (b) the orthodox stabilization program of 1975; (c) the exchange rate-based...

Real exchange rate appreciation usually accompanies stabilization programs based on the exchange rate. One thing that causes the real exchange rate to appreciate is the capital inflows that follow liberalization of the capital account and the financial market. Capital inflows cause the exchange...

The Bank introduced adjustment lending in 1979 to help member countries restructure their economies to create conditions conducive to equitable growth while maintaining a sustainable balance of payments. A review of the experience of other nations with adjustment problems may provide useful...

In recent years, private capital inflows to some developing countries have increased sharply. This increase has provided the financing needed to enhance the use of existing capacity and to raise investment levels. But capital inflows produce their own problems. They can increase inflation and...