Over the 1990s macroeconomic policies improved in most developing countries, but the growth dividend from this improvement fell short of expectations, and a policy agenda focused on stability turned out to be associated with a multiplicity of financial crises. This article examines the contents...

In the early 1990s capital flows to the Asian economies were dominated by FDI. By contrast, Latin America was attracting little FDI and a large share of its inflows were either short-term or portfolio and viewed as “hot money.” These differences gave rise to the view that Latin America was...

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Following the 1997–98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, superficially consistent with the bipolar view of exchange rate regimes and the “hollow middle” hypothesis. But some observers have claimed that, despite the...

It is well known that in a small open economy where there is perfect substitutability between domestic and foreign assets and costless portfolio adjustment, the monetary authorities, pursuing an exchange-rate target, cannot control the money supply, but can influence the balance of payments...

Adjustment programs in developing countries emphasize the importance of reducing fiscal deficits in order to improve aggregate saving and investment performance. Recent theoretical analyses associated with the Ricardian equivalence proposition, however, suggest that changes in the level of...

For almost twenty years, Pakistan's fiscal deficit, at about 7 percent of GNP, averaged nearly twice the level for Asian countries as a whole. This paper examines the causes of Pakistan's fiscal deficits. The authors examine why, despite these deficits, the country's macroeconomic performance...

After years of poor economic performance, many Latin American countries undertook ambitious programs of macroeconomic stabilization andstructural reform in recent years. This change in policy created high expectations for the region, and some observers have questioned whether actual growth...