<DIV><P>The essays brought together in this volume share a common objective: To bring a unifying methodological approach to the analysis of financial problems in developing, open economies. While the primary focus is on contemporary Latin America, the methods employed and the lessons learned are of...</p></div>

This paper shows that globalization of securities markets exacerbates the volatility of capital flows by strengthening incentives for herding behavior. This is a prediction of a mean-variance portfolio optimization model with imperfect information, in which investors acquire country-specific...

<DIV>The debt crisis of 1982 caused serious economic disruptions in most developing countries. <I>Reform, Recovery, and Growth</I> explains why some of these countries have recovered from the debt crisis, while more than a decade later others continue to stagnate.<BR><BR>Among the questions addressed are: What are...</i></div>

<DIV>Again and again, Latin America has seen the populist scenario played to an unfortunate end. Upon gaining power, populist governments attempt to revive the economy through massive spending. After an initial recovery, inflation reemerges and the government responds with wage an price controls....</div>

This paper develops a dynamic continuous-time model in which international risk sharing can yield substantial welfare gains through its positive effect on expected consumption growth. The mechanism linking global diversification to growth is an attendant world portfolio shift from safe, but...