We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy,...

Business Cycles in emerging markets are characterized by strongly counter-cyclical current accounts, consumption volatility that exceeds income volatility and dramatic sudden stops' in capital inflows. These features contrast with developed small open economies and highlight the uniqueness of...

Emerging market business cycles exhibit strongly countercyclical current accounts, consumption volatility that exceeds income volatility, and quot;sudden stopsquot; in capital inflows. These features contrast with developed small open economies. Nevertheless, we show that a standard model...

We document and contrast features of the business cycle for emerging markets and developed small open economies. Current accounts are shown to be more strongly countercyclical and consumption is more volatile relative to income in emerging markets. Next we show that a standard dynamic stochastic...