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The issue of whether constraints should be placed on fiscal policies when moving to European monetary union is examined in the context of the use of fiscal policy for macroeconomic stabilization purposes. Examples of shocks hitting French and German economies are considered: an appreciation of their joint exchange rate against other currencies, an inflation shock, and an oil price increase. Except in the third case, flexible use of fiscal policies in the two countries is likely to give better outcomes than a system with constraints on their use. For the oil price shock, there seems to be a good case for policy coordination, not for ceilings on fiscal deficits.

Balance of payments --- Current Account Adjustment --- Current account balance --- Current account deficits --- Current account --- Economic integration --- Exports and Imports --- Financial Aspects of Economic Integration --- Fiscal Policy --- Fiscal policy --- International economics --- Macroeconomics --- Monetary unions --- Public Finance --- Short-term Capital Movements --- France

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This paper draws some lessons about policies toward the current account from Italy’s balance of payments history between 1960 and 1988. The key role of speculative capital flows during every major episode of external imbalance brings out the limitations of exchange rate rules that focus exclusively on the current account. Simple saving-investment rules would also have failed to avert Italy’s balance of payments crises. These arose in the context of widening current deficits due to a rising investment ratio and/or a widening private imbalance, which should have been self-correcting according to the commonly proposed saving-investment rules.

Balance of payments --- Banking --- Banks and Banking --- Capital account --- Capital flows --- Capital movements --- Central banks --- Current Account Adjustment --- Current account deficits --- Current account --- Exports and Imports --- Foreign exchange reserves --- International economics --- International Investment --- International reserves --- Long-term Capital Movements --- Monetary Policy --- Short-term Capital Movements --- Italy

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Les Perspectives de l'économie mondiale (PEM) présentent des analyses de l'évolution économique mondiale à court et moyen termes, préparées par les principaux économistes du FMI. Elles constituent une ressource respectée, centrale et fiable d'informations fouillées et équilibrées, permettant aux décideurs et aux dirigeants du monde entier de prendre le recul nécessaire. Publiées deux fois par an, les Perspectives de l’économie mondiale présentent sous une forme claire et pratique les perspectives en matière de croissance, d’inflation, de commerce international et d’emploi, et s'intéressent également à d'autres domaines économiques. Chaque numéro des PEM se penche sur les problèmes qui touchent les pays avancés, émergents et en développement. Les banques centrales, les économistes, les institutions financières, les chefs d’entreprises, les gouvernements, les groupes de réflexion et les chercheurs attendent avec impatience cette étude sans pareille de la situation actuelle et de ce qui se prépare.

Economic forecasting. --- Balance of payments --- Balance of trade --- Banking --- Banks and Banking --- Currency --- Current Account Adjustment --- Current account balance --- Deflation --- Exports and Imports --- Exports --- Fiscal policy --- Foreign exchange --- Inflation --- International economics --- International Lending and Debt Problems --- International Trade Organizations --- Macroeconomics --- Price Level --- Prices --- Public finance & taxation --- Public Finance --- Short-term Capital Movements --- Trade balance --- Trade Policy --- Trade: General --- Germany

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This paper describes developments in the balance of payments of Pakistan during 1972-86, focusing particularly on the factors that gave rise to external payments problems and the macroeconomics policies that were adopted by the authorities. While performance on the growth and inflation fronts compares favorably with other developing countries, the balance of payments remained persistently weak. A combination of favorable external shocks, such as the large increase in workers’ remittances and sizable foreign aid inflows, allowed the economy some breathing room, but ultimately did not reduce the need for comprehensive fiscal and trade reforms to ensure medium-term viability of the balance of payments.

Balance of payments --- Credit --- Currency --- Current Account Adjustment --- Current account balance --- Current account deficits --- Debt Management --- Debt --- Debts, Public --- Development Planning and Policy: Trade Policy --- Domestic credit --- Exchange rate policy --- Exports and Imports --- Factor Movement --- Foreign Exchange Policy --- Foreign Exchange --- Foreign exchange --- Government debt management --- Imports --- International economics --- Monetary economics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Monetary Policy --- Money --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Short-term Capital Movements --- Sovereign Debt --- Trade: General --- Pakistan

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The degree of capital mobility in developing economies is seldom estimated, even though it is widely recognized to be an important element in determining the effects of stabilization policies. Instead, an economy is assumed to be open or closed mainly on grounds of analytical convenience. This paper develops a simple approach to modelling and measuring the degree of financial openness which is applicable to developing economies. Empirical estimation using data from a large number of developing countries suggests that the effective degree of capital mobility in such economies may be higher than is commonly assumed.

Balance of payments --- Banks and Banking --- Capital account --- Capital controls --- Capital flows --- Capital movements --- Current Account Adjustment --- Exports and Imports --- Finance --- Financial services --- Interest rate parity --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- International economics --- International Investment --- Long-term Capital Movements --- Monetary base --- Monetary economics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Monetary Policy --- Money supply --- Money --- Short-term Capital Movements --- India