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Mr. Tamim Bayoumi and Mr. Barry J. Eichengreen
This paper examines some popular explanations for the smooth operation of the pre-1914 gold standard. We find that the rapid adjustment of economies to underlying disturbances played an important role in stabilizing output and employment under the gold standard system, but no evidence that this success also reflected relatively small underlying disturbances. Finally, the paper also suggests an explanation for the evolution of the international monetary system based on growing nominal inertia over time.
International Monetary Fund. Research Dept.

, regardless of the ambiguous effect of higher tariffs on economic growth, small countries cannot improve their welfare by enhancing trade protection. This in turn implies that focusing exclusively on a country’s growth rate could be misleading. The discussant, Will Martin of the World Bank, suggested that the framework of the paper be used to evaluate the impact of differential rates of growth on sectoral total factor productivity. The next paper—”When Do Externally Mandated Reforms Work? The Case of Trade Conditions in IMF Programs,” by Shang-Jin Wei and Zhiwei Zhang of

International Monetary Fund

saving rate is not likely to decline any further over the medium term. The remainder of this chapter is organized as follows. Section 2 reviews the historical trends in total and sectoral saving rates (household, corporate, and government) in Korea and analyzes their interactions. Section 3 introduces the theoretical framework of the paper and outlines the issues to be addressed. Section 4 presents the empirical specification of the model and the estimation results. Section 5 discusses the results of a simulation exercise which illustrates the medium

Mr. Paul R Wade and Ms. Era Dabla-Norris

for offense. In this interpretation, arms enable agents to protect their wealth from appropriation by others but also to extract rents from other agents. 4 Hence, when property rights protection is poor or ineffective, wealthy agents have an incentive to buy arms (i.e., paying the entrance fee to rent seeking). The purchase of these arms, however, also enables them to prey on the wealth of other agents in the economy. The general framework of the paper is a simple overlapping generation model with the absence of labor and credit markets. Agents in this model have

International Monetary Fund

the main theories of the role of labor market experience, presents the conceptual framework of the paper, and contains the main results. Section D concludes. B. Labor Market Institutions and Trends in France and Germany Institutional background 76. Young French and German workers face different institutional environments when exiting secondary school. Almost two thirds of young Germans start an apprenticeship at the end of secondary education, most commonly after nine or ten years of schooling. Apprenticeships last two to three years and involve formal

Mr. Tamim Bayoumi and Mr. Barry J. Eichengreen

models of fixed exchange rate regimes, and that it grew progressively steeper with the evolution of the international monetary system toward greater exchange rate flexibility. Finally, the simple aggregate-supply-aggregate-demand framework of the paper suggests an explanation for the evolution of the international monetary system. Insofar as we find the short-run aggregate supply curve becoming progressively flatter, implying growing nominal inertia over time, this suggests that governments have had an incentive to opt for regimes permitting greater exchange rate

International Monetary Fund. Research Dept.
The IMF Research Bulletin, a quarterly publication, selectively summarizes research and analytical work done by various departments at the IMF, and also provides a listing of research documents and other research-related activities, including conferences and seminars. The Bulletin is intended to serve as a summary guide to research done at the IMF on various topics, and to provide a better perspective on the analytical underpinnings of the IMF’s operational work.
Mr. Pablo Emilio Guidotti

implications obtained when there is no precommitment. However, many qualitative features of the interaction between wage and public debt indexation remain unchanged. I. Basic Model This section sets up the basic analytical framework of the paper by integrating Gray’s (1976) analysis of wage indexation and Calvo and Guidotti’s (1990) analysis of debt indexation. Emphasis is placed on the interaction between the degree of wage indexation and government fiscal and monetary decisions. Wage Contracts Consider a small open economy in which the production function

Mr. Paul R Wade and Ms. Era Dabla-Norris
This paper studies the relationship between wealth inequality and occupational choice between rent-seeking and production. With imperfect credit markets and a fixed cost to rent-seeking, only wealthy agents choose to engage in rent-seeking as it enables them to protect their wealth from expropriation. Hence, initial wealth determines occupational choice and aggregate economic activity. The model also generates an unequal wealth distribution endogenously through fair gambles undertaken voluntarily, despite agents being identical ex ante. If agents have an altruistic bequest motive, income and occupational differences can be perpetuated from generation to generation.
Mr. Hans Genberg and Mr. Alexander K. Swoboda

-changing policies have the most direct and quantitatively strongest influence on the current account. Expenditure-switching policies, in contrast, affect the exchange rate significantly but have only a limited impact on the current account. We also show that fiscal policy has a comparative advantage over monetary policy as an instrument for current account adjustment as opposed to domestic aggregate demand stabilization. The organization of the paper is as follows. Section I presents the analytical framework of the paper, first by explaining why partial equilibrium approaches