Recent studies have shown that exchange rates in developing countries have limited flexibility. In this paper we review the existing explanations for this stylized fact, using a simple framework of monetary policy in a world where firms face balance sheet effects and the economy has a high...

This paper spells out a logic for increasing macroeconomic policy space in order to prioritize the goals of growth, employment creation and poverty reduction. First, there is the need to create additional policy instruments so that a greater number of policy goals can be addressed. Frequently,...

This paper argues that the agenda for international financial reform must be broadened in at least two senses. First of all, it should go beyond the issues of financial prevention and resolution to those associated with development finance for poor and small countries, and to the “ownership”...

This paper examines whether policies to promote foreign direct investment (FDI) make economic sense. The discussion focuses on whether existing academic research suggests that the benefits of FDI are sufficient to justify the kind of policy interventions seen in practice. For small open...

This paper uses the term, capital management techniques, to refer to two complementary (and often overlapping) types of financial policies: policies that govern international private capital flows and those that enforce prudential management of domestic financial institutions. The paper shows...

The main goal of the paper is to discuss the problem of macroeconomic policy coordination in MERCOSUR and how it could contribute to sustaining growth. In the first part, the paper reviews the macroeconomic situation of MERCOSUR, emphasizing the role of the developments that followed the regime...

The Aid for Trade initiative marked international acceptance of the limitations of trade as a tool for development and of a role for the WTO in aid. Countries need infrastructure, institutions, technical capacity, and investment in order to trade, and to respond to liberalization. Although many...