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International Monetary Fund. Research Dept.
This paper constructs a general-equilibrium model of an open economy and to develop a computational technique for deriving a market-clearing solution to the model. The model will allow for disaggregated commodities, taxes, and tariffs, so that the individual parameter changes that are often considered by a government may be examined. The model includes a government that is an active participant in the economy as a producer of public goods and that may influence the rate of savings by its actions. Private firms are assumed to have linear technologies in intermediate and final goods, but have the possibility for substitution among the scarce factors that enter their value added, and are assumed to maximize profits at given market prices subject to taxes on profits, defined as returns to capital. It is the normal procedure in work on general-equilibrium models to deal separately with the supply and demand sides of the economy in question, and to then construct excess demand functions.
International Monetary Fund. Research Dept.
This paper reports the results of some preliminary research into the repercussions, for income distribution, of stabilization programs associated with the use of IMF resources in the upper credit tranches. In the first section, it explores the relationship between the balance of payments and the distribution of income from a theoretical perspective. The general concern is whether adjustment influences the distribution of income in some systematic manner; the concern is to delineate the conditions under which a decline in the real wage is necessary for adjustment actually to take place. Using neoclassical analysis, one finds that the ratio of the nominal wage to the price of exports must decline, but whether this involves a fall in the overall real wage depends on many variables, including the relative proportions of traded and nontraded goods in the consumer's market basket. Second, it presents a qualitative analysis of the distributional effects of the measures that tend to be included in these programs, viz., ceilings on net credit expansion, currency depreciation, and the relaxation and simplification of exchange restrictions and controls.
International Monetary Fund. Research Dept.
The Mundell-Fleming model of international macroeconomic originated in the early 1960s and has been extended during the ensuing quarter century. This paper develops an exposition that integrates the various facets of the model and incorporates its extensions into a unified analytical framework. Attention is given to (1) the distinction between short-run and long-run effects of policies, (2) the implications of debt and tax financing of government expenditures, and (3) the role of the exchange rate regime in this regard. By identifying the key mechanisms operating in the model, the exposition clarifies the model’s limitations and facilitates comparison with other, more current approaches.
International Monetary Fund. External Relations Dept.

The Fifty-Second Annual Meetings of the IMF and the World Bank concluded with a consensus that global opening and integration offer the only path to worldwide prosperity and that strong IMF surveillance over the policies of its 181 members remains essential. The meetings achieved important and concrete results for the IMF, notably an endorsement by ministers and governors of the IMF’s role in promoting the liberalization of capital flows, agreement on a 45 percent increase in IMF quotas, and agreement on an “equity” SDR allocation that doubles SDRs allocated to date.

International Monetary Fund. Research Dept.

Staff Papers draws on IMF Working Papers, which are research studies by members of the Fund’s staff. A list of Working Papers issued in 1992:3 follows; additions will be noted in future issues.