The recent empirical literature on the economic effects of terms of trade shocks highlights not only the direct effects on growth, but also the resulting changes in volatility and debt. We link the procyclicality of sovereign debt to terms of trade shocks and provide theoretical underpinnings...

Government policies are frequently known to be temporary and thus their termination is perfectly anticipated. These foreseen policy changes must be consistent with equilibrium in both the goods market and asset markets. Potential problems arise because prices often play dual roles, both as final...

This paper analyzes the impact of an increase in the price of oil on a small developing economy. We consider the extent to which the impacts of oil price shocks depend upon the economy's internal production structure and its access to the world financial market, and find that the long-run impact...