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A striking feature of sovereign lending is that many countries with moderate debt-to-income ratios systematically face higher spreads and more stringent borrowing constraints than others with far higher debt ratios. Earlier research has rationalized the phenomenon in terms of sovereign reputation and countries' distinct credit histories. This paper provides theoretical and empirical evidence to show that differences in underlying macroeconomic volatility are key. While volatility increases the need for international borrowing to help smooth domestic consumption, the ability to borrow is constrained by the higher default risk that volatility engenders.

Debts, External --- Business cycles --- Economic cycles --- Economic fluctuations --- Cycles --- Developing countries --- Economic conditions. --- Exports and Imports --- Macroeconomics --- Public Finance --- International Lending and Debt Problems --- Macroeconomics: Consumption --- Saving --- Wealth --- Debt --- Debt Management --- Sovereign Debt --- Aggregate Factor Income Distribution --- International economics --- Public finance & taxation --- Debt default --- Consumption --- Public debt --- Income --- Debt burden --- Economics --- Debts, Public --- United States

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This Selected Issues paper on France underlies public intervention in financial markets. Econometric analysis indicates that in the long term, consumption tracks disposable income closely but is also affected by wealth effects. A counterfactual exercise suggests that a lower return to experience could be responsible for lower early wage growth in France. Increased training could enhance the employment experience of the low-skilled young worker in France provided that its cost is shared between the employer and the employee.

Banks and Banking --- Inflation --- Labor --- Macroeconomics --- Money and Monetary Policy --- Macroeconomics: Consumption --- Saving --- Wealth --- Interest Rates: Determination, Term Structure, and Effects --- Aggregate Factor Income Distribution --- Wages, Compensation, and Labor Costs: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Labour --- income economics --- Banking --- Finance --- Monetary economics --- Consumption --- Central bank policy rate --- Income --- Wages --- Disposable income --- National accounts --- Financial services --- Economics --- Interest rates --- Labor market --- France

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This Selected Issues paper examines prospects for increasing growth and reducing poverty in the Solomon Islands. The paper highlights that agriculture constitutes the largest sector of the Solomon Islands economy, averaging about 20 percent of GDP throughout the 1990s. The Solomon Islands also has large fish resources, and the fisheries sector accounted for an average of 7 percent of GDP and 30 percent of total exports in the 1990s. The paper also examines the state of the financial sector in the Solomon Islands.

Banks and Banking --- Macroeconomics --- Agribusiness --- Industries: Financial Services --- Public Finance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Aggregate Factor Income Distribution --- Agricultural Markets and Marketing --- Cooperatives --- Debt --- Debt Management --- Sovereign Debt --- Banking --- Agriculture, agribusiness & food production industries --- Finance --- Public finance & taxation --- Income --- Commercial banks --- Agroindustries --- Loans --- National accounts --- Financial institutions --- Economic sectors --- Public debt --- Banks and banking --- Agricultural industries --- Debts, Public --- Solomon Islands

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This paper theoretically and empirically investigates the role of spousal labor in buffering transitory shocks to husbands' earnings. To measure the amount of the shock that spousal labor absorbs, an instrumented cross-sectional variance decomposition is developed. Using data from the Panel Study of Income Dynamics, the paper finds that the smoothing resulting from the wives' labor response (both labor force participation and hours of work) is larger for households with limited access to credit. This finding, which is consistent with the model's prediction, indicates that because of the presence of liquidity constraints, the temporal change in family income (exclusive of wives' earnings) reinforces the substitution effect in explaining the effect of shocks to the husbands' earnings on spousal labor.

Married women --- Women --- Liquidity (Economics) --- Assets, Frozen --- Frozen assets --- Finance --- Human females --- Wimmin --- Woman --- Womon --- Womyn --- Females --- Human beings --- Femininity --- Married people --- Wives --- Employment --- Economic aspects --- Econometric models. --- Labor --- Macroeconomics --- Money and Monetary Policy --- Wages, Compensation, and Labor Costs: General --- Labor Economics: General --- Aggregate Factor Income Distribution --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Demand and Supply of Labor: General --- Labour --- income economics --- Monetary economics --- Wages --- Income --- Credit --- Labor supply --- Labor economics --- Labor market --- United States

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Australia's remarkable economic performance during the 1990s has not resulted in a significant convergence of real per capita income, output, and employment levels across the country's states and territories. This paper explores the role of certain economic rigidities that may have contributed to the lack of convergence, including rigidities in labor markets and in the structure of federal government transfers to households and subnational governments. The analysis suggests that the wage awards system has restricted the adjustment of real wages to productivity differentials, thus contributing to higher unemployment rates in some states. Federal government transfers to households also appear to have adversely affected work incentives in high unemployment states by limiting participation in the labor force.

Labor supply --- Income --- Unemployment --- Joblessness --- Employment (Economic theory) --- Full employment policies --- Manpower policy --- Underemployment --- Family income --- Fortunes --- Household income --- Personal income --- Economics --- Finance --- Property --- Wealth --- Gross national product --- Profit --- Purchasing power --- Labor force --- Labor force participation --- Labor pool --- Work force --- Workforce --- Labor market --- Human capital --- Labor mobility --- Manpower --- Regional disparities. --- Labor --- Macroeconomics --- Aggregate Factor Income Distribution --- Unemployment: Models, Duration, Incidence, and Job Search --- Macroeconomics: Production --- Labor Economics: General --- Labour --- income economics --- Unemployment rate --- Production growth --- Production --- Economic theory --- Labor economics --- Australia