The performance of alternative fiscal rules is examined in an endogenous growth model. The government spends money on infrastructure, maintenance, and health. Infrastructure affects the production of both commodities and health services. The performance of a balanced budget rule, as well as...

This paper discusses the complexities and challenges in finding a stable long-run solution for the Eurozone crisis. We first discuss the macroeconomic and structural differences among North and South European countries. Focusing on trade, labour productivity and balance of payments data, we show...

This paper studies the optimal taxation structure and public maintenance spending in an endogenous growth model where public maintenance spending effects the efficiency of public and private capital. Private firms also spend on maintenance, which increases the effieicieny of private capital and...

Informal credit and foreign currency markets are a widespread phenomenon in developing countries. This paper begins by reviewing the scope and nature of these markets, and the channels through which they operate. It then examines their implications for macroeconomic management, particularly in...

This paper examines whether output contractions associated with downturns and crises have an asymmetric effect on poverty. Several potential sources of asymmetry are identified first. A vector auto-regression model (involving the output gap, unemployment, real wages, and the poverty rate) is...

This paper examines the exit process from adjustable pegs and exchange rate bands, and the role of capital flows in these exits. It dwells on the experience of various countries, including Chile, Colombia, Egypt, Israel, India, Poland, and Yemen. It begins by identifying conditions under which...

What role does public policy play in helping countries accelerate the industrialization process? This note aims to answer this question by applying a framework to analyze the process of transitioning from imitation to innovation. Based on a dynamic model of growth, simulations suggest that...