The objective of this paper is to provide an exhaustive characterization of the empirical linkage between current account deficits and a broad set of economic variables proposed by the literature. In order to accomplish this task, we complement and extend previous empirical research by (1) using...

The role of regional integration agreements as a determinant of the location of FDI has become an increasingly relevant issue for emerging economies. In Latin America, the largest effects are likely to be associated with the Free Trade Area of the Americas (FTAA). In this regard, there are a...

Choosing an exchange rate regime is one of the most important decisions in macroeconomic policymaking. Some countries may peg their currency to gain credibility and control domestic inflation, while others may be more prone to float due to the larger incidence of real shocks. In spite of the...

This paper provides new empirical evidence on macroeconomic policies and results in Latin America and the Caribbean (LAC), based on recent data for the region and the world at large. Our results show that: (i) both monetary and fiscal policies are counter- (pro-) cyclical when credibility is...

This paper explores empirically the role of risk and return factors in the observed evolution of net foreign asset positions of a large number of industrial and developing economies. The paper adopts a dynamic approach in which investors’ portfolios adjust gradually to their long-run...

Public investment and infrastructure spending are often singled out for drastic cuts at times of fiscal retrenchment. Fiscal austerity in Latin America during the 1980s and 1990s was characterized by a sharp contraction in infrastructure spending. In 5 of the 9 major Latin American countries,...