We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the...

After the break-up of the Soviet Union, Uzbekistan’s output fell less than in any other former Soviet Republic, and growth turned positive in 1996/97. Given the country’s hesitant and idiosyncratic approach to reforms, this record has suprised many observers. This paper first shows that a...

This paper surveys the literature on sovereign debt from the perspective of understanding how sovereign debt differs from privately issue debt, and why sovereign debt is deemed safe in some countries but risky in others. The answers relate to the unique power of the sovereign. One the one hand,...

Recent research has found that current account balances under flexible regimes seem to be no less persistent than under fixed regimes. This result appears to undermine Milton Friedman's well known — and commonly accepted — claim that flexible exchange rates facilitate the adjustment of...