We analyze how the altruism of an International Financial Institution (IFI) towards its Low-Income member Countries (LICs) alters the effectiveness of its loans. We study IFI loans to a credit-constrained LIC. The IFI's repayment policy is determined by the interplay of its concerns for the...

This paper is about real convergence, capital flows, and monetary policy in the European transition countries. It shows how differences in factor endowments coupled with Balassa-Samuelson real exchange rate effects will motivate capital flows, exacerbate the complexity of monetary policy...

Transition countries that open themselves up to global capital markets are like honest citizens in a dangerous world - they are vulnerable to large and potentially erratic flows. Such flows should not be seen as one-off destabilizing events: they are intrinsic to the transition process and...

The Asian financial crisis of 1997-98 was one of the most dramatic economic events of recent times, which raised many questions regarding the appropriate policy response to financial crises. This paper reviews the experience of this crisis, focusing on the overall strategy of crisis management...

We study a simple neoclassical model of investment in a developing country, modified to allow for long-term projects and short-term debt. Early signals indicating low productivity of investment may lead creditors to call loans in early. In such a crisis, firms protected by limited liability...

On May 1, 2004, ten countries in Central, Eastern and Southern Europe will become full members of the EU. The parliaments and monetary authorities of the ten accession countries have already to a large extent adapted their legal and institutional structures to the new Europe-wide environment....