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This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.
The paper reviews the case for a strong multilateral response to the global crisis in emerging markets (EMs). It discusses modalities and feasibility of intervention and its associated risks, depending on country circumstances of fiscal space and liquidity needs. The specific role of Multilateral Development Banks (MDBs) in ensuring the development effectiveness of the fiscal response is also disc ... (View publication)
This paper shows that exchange rate depreciation has a negative effect on the balance sheet of Brazilian companies with foreign indebtedness; this effect stems mainly from the negative correlation between the exchange rate and international commodity prices. While the face value of liabilities increased in proportion to the exchange rate during the period studied, revenues from exporting compa ... (View publication)
This paper explains in detail the external sustainability assessment approach given by the stock-flow relationship between the net external positions, non-income current account plus net capital transfers, and real exchange rate. This approach consists of determining the non-income current account over GDP that would stabilize a benchmark net foreign asset (NFA) position over the medium term, ... (View publication)
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