We present evidence of inelastic demand for risky sovereign bonds and explore its implications for optimal government debt policies. Using monthly changes in the composition of a major international bond index, we identify flow shocks unrelated to fundamentals that shift the available bond...

We study the effects of capital account liberalization on firm capital allocation and aggregate productivity in ten Eastern European countries. Using a large firm-level dataset, we show that capital account liberalization decreases the dispersion of the return to capital across firms,...

August 2000 - Hikes in U.S. interest rates in 1999-2000 have started to spill over to other economies' interest rates, which in many countries have risen to reflect the higher U.S. rates. Are countries with flexible exchange rates better able to isolate their domestic interest rates from this...