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This paper surveys the literature on sovereign debt that deals with the issues of a country’s ability-to-pay, its willingness-to-pay, and the policy responses to the debt crisis of the 1980s. The existence of an ability-to-pay problem suggests a need for debt reduction, but plans for debt relief face potential incentive problems, and sovereign debt repurchases are not always a welfare maximizing method of debt restructuring. The paper synthesizes the main conclusions on these issues. With a willingness-to-pay problem, the potential penalties for debt repudiation are important in the endogenous determination of the repayment outcome. Penalties that are intertemporal in nature have different implications for debt repudiation than do intratemporal penalties. In addition, the asymmetric distribution of the costs of default can lead to a recurrent cycle of debt accumulation and default.

Asset and liability management --- Debt Management --- Debt reduction --- Debt relief --- Debt service --- Debt --- Debts, External --- Debts, Public --- Economic & financial crises & disasters --- Exports and Imports --- External debt --- Finance --- Financial Crises --- Financial crises --- Financial Risk Management --- International economics --- International Lending and Debt Problems --- Public debt --- Public finance & taxation --- Public Finance --- Sovereign Debt --- United States

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This paper provides an overview of recent Chinese reforms to introduce a modern system of fiscal federalism that balances the need for central macroeconomic control with the economic advantages of decentralized government. Following a discussion of the rationale for decentralization, the paper describes the main structural and economic developments in China in this area, including their impact on economic stabilization. The key measures in the 1994 fiscal reforms as well as reform initiatives needed in the future are also discussed.

Macroeconomics --- Public Finance --- State and Local Taxation, Subsidies, and Revenue --- State and Local Budget and Expenditures --- Intergovernmental Relations --- Federalism --- Secession --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Expenditure --- Fiscal policy --- Fiscal federalism --- Expenditure assignments --- Revenue assignments --- Expenditures, Public --- China, People's Republic of

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This paper empirically examines the extent to which a country's economic growth is influenced by its trading partner economies. Panel estimation results based on four decades of data for over 100 countries show that trading partners' growth and relative income levels have a strong effect on domestic growth, even after controlling for the influence of common global and regional trends. One interpretation is that conditional convergence is stronger, the richer are a country's trading partners. A general implication of the results is that industrial countries benefit from trading with developing countries, which grow rapidly, while developing countries benefit from trading with industrial countries, which have relatively high incomes.

International trade. --- Economic development. --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- External trade --- Foreign commerce --- Foreign trade --- Global commerce --- Global trade --- Trade, International --- World trade --- Commerce --- International economic relations --- Non-traded goods --- Developing countries --- Commerce. --- Exports and Imports --- Macroeconomics --- Demography --- Economic Growth of Open Economies --- Economic Integration --- Personal Income, Wealth, and Their Distributions --- Empirical Studies of Trade --- Demographic Trends, Macroeconomic Effects, and Forecasts --- International economics --- Population & migration geography --- Personal income --- Terms of trade --- Direction of trade --- Population growth --- National accounts --- International trade --- Population and demographics --- Income --- nternational cooperation --- Balance of trade --- Population --- United Kingdom --- Nternational cooperation

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This paper examines two important issues for a small high-inflation open economy with trade controls where the government implements an exchange-rate based stabilization program: first, the extent to which the degree of openness of the economy influences the probability of success of the program; and second, the conditions under which a trade reform, implemented in conjunction with the stabilization program, will increase the probability that stabilization will be successful. The paper shows that in an economy with high export and import price elasticities, structural reforms to increase openness can be important in determining the success of the program.

Balance of trade --- Commercial policy --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Currency --- Deflation --- Empirical Studies of Trade --- Exports and Imports --- Foreign Exchange --- Foreign exchange --- Inflation --- International economics --- International Trade Organizations --- Macroeconomics --- Open Economy Macroeconomics --- Price Level --- Prices --- Public finance & taxation --- Real exchange rates --- Stabilization --- Tariff --- Tariffs --- Taxation --- Trade balance --- Trade liberalization --- Trade Policy --- Treasury Policy