This paper focuses on the relation of inflation to economic development. Due to the inadequacy of savings and the difficulty of directing them into productive investment, there is a strong temptation to raise the level of investment by expanding bank credit-that is, by inflation. In most...

This paper analyzes determinants of the evolution of exchange rates within the context of alternative models of exchange rate dynamics. The overshooting hypothesis is examined in models that emphasize differential speeds of adjustment in asset and goods markets as well as in models that...

This paper deals with the role of inflationary expectations from a theoretical and empirical point of view. Assume that an economy is growing at a steady pace and that the price level is not expected to change. For many individuals, the direct substitution of consumption goods for money becomes...

In this paper, various policy instruments at the disposal of national governments for dealing with the problem of disruptive international capital flows or, more generally, the problem of temporary and reversible payments imbalances, are passed in review. The instruments examined include:...

This paper presents main characteristics of a typical oil economy. Estimates of proven oil reserves in Saudi Arabia differ widely, ranging from estimates by ARAMCO and the other companies of about 100 billion barrels to figures exceeding 150 billion barrels. In 1969, two US firms commissioned by...

This paper constructs three simple model of the financial effects on countries in different situations of the various arrangements regarding reserve supply that were discussed during the recent negotiations on reform of the international monetary system. Much of the analysis is devoted to an...

This paper illustrates the important consequences of the choice of reserve assets. It considers hypothetical international reserve systems based on gold, on one or several national currencies, on an international financial asset that is not a national currency, and on a combination of these...

The monetary approach, however, is based on a balance-sheet identity that does not itself yield testable hypotheses. Predictions capable of being disproved can be derived only from a structural model used in conjunction with this approach. This paper analyzes the behavior of a small open economy...

The purpose of this paper is to outline a theoretical framework that can serve as a starting point for analyzing interest rate behavior in those developing countries that are in the process of removing controls on the financial sector and restrictions on capital flows. The approach suggested...