The driving forces behind the Turkish export miracle, and in fact its very existence, have remained a matter of debate We show there was a boom. As to contributing factors, import growth in the Middle East in excess of import growth elsewhere made a negative contribution. On exports to non-oil countries, we show that earlier claims that their growth was an accounting artifact are incorrect Moreover, we find that export subsidies were mostly shifted backwards into higher producer profits. The export boom was triggered by macro-economic policies and trade reform that allowed a steady real depreciation of the Lira.

How fast should Mexican agriculture be incorporated into the North American Free Trade Agreement? We focus on the implications for policy design of the absence of efficient capital markets, on the welfare costs of reforming gradually, on incentive problems created by trade adjustment policies, and on the redistributive aspects of policy reform--all transitional problems that arise in most economic reforms. A key consideration is that adjustment should focus on increasing the value of the assets owned by the groups affected, and not on direct income transfers or programs targeted on characteristics controlled by the beneficiaries.

This paper extends earlier work on unsustainable monetary policies by endogenizing the regime switch that ultimately restores sustainability. Within this framework we analyse exchange rate based stabilization programmes and show how constraints on Central Bank borrowing during an exchange crisis influence timing and nature of the post-collapse equilibrium. Such constraints introduce non-neutralities; more restrictive pre-collapse credit policies increase the post-collapse inflation rate. External shocks can destroy consistency between fiscal programmes and inflation targets, causing reserve losses, exchange rate changes and higher inflation. Balance of Payments crises are the mechanism through which fiscal imbalances translate into higher inflation rather than an alternative explanation of it.

Recent work on macroeconomics of price increases of intermediate imports while theoretically rigorous and elegant, is still unable to explain the stylized facts. This paper attempts to remedy the shortcomings of earlier papers by using a two-period model to properly analyse investment and savings behaviour and hence the current account. The model also incorporates disequilibrium in first-period labour and goods markets to compare the response of countries in different disequilibrium regimes to shocks in intermediate input prices.

We explain nontraded goods and labor shortages in the Gulf countries, the decline of the traded goods sector in oil producers (“Dutch Disease”), and the absence of employment benefits of higher oil revenues in Latin American oil producers using a disequilibrium model where real wages and the real exchange rate adjust slowly to clear the labor and nontraded goods market. Higher oil revenues can be likened to a transfer putting pressure on NT goods prices and drawing resources out of the T sector. The slope of the wage indexation line determines whether classical unemployment or repressed inflation results. Various policy measures are analyzed.

Investigates the effecto of the North American Free Trade Agreement on agriculture in Mexico. Implications on policy design for the absence of efficient capital markets, on the welfare costs of reforming gradually, on incentive problems created by trade adjustement policies and on the redistribution aspects of policy reform.