Gonzalo Pastor

The Russian Financial Crisis and its Consequences for Central Asia

This paper reviews the economic conditions in central Asia at the time of the Russian financial crisis of August 1998; the channels by which the crisis was transmitted to the central Asian region; and the policy responses. The paper concludes that, while real exchange rates of central Asian national currencies vis-a-vis the Russian ruble have returned to their pre-crisis levels following the nominal devaluations that ensued, other indicators of external competitiveness, such as unit labor cost indices, suggest the need for further surveillance in this area. Also, it is not yet clear if full exchange rate flexibility has been established in central Asia despite the protracted and costly exits from the nominal exchange rates in place at the time of the crisis. Finally, the debt-to-GDP ratios in central Asia, which grew rapidly between 1998 and 1999 in the context of large exchange rate adjustments, remain a challenge for the Tajik and Kyrgyz authorities, in particular.

Benford's Law and Macroeconomic Data Quality

This paper examines the usefulness of testing the conformity of macroeconomic data with Benfords law as indicator of data quality. Most of the macroeconomic data series tested conform with Benfords law. However, questions emerge on the reliability of such tests as indicators of data quality once conformity with Benfords law is contrasted with the data quality ratings included in the data module of the Reports on the Observance of Standards and Codes (data ROSCs). Furthermore, the analysis shows that rejection of Benfords law may be unrelated to the quality of statistics, and instead may result from marked structural shifts in the data series. Hence, nonconformity with Benfords law should not be interpreted as a reliable indication of poor quality in macroeconomic data.

Angola`s Fragile Stabilization

This paper discusses the nature of Angola`s disinflation strategy in recent years, with special emphasis on the most recent efforts by the Angolan authorities to stabilize the economy. Looking to the past, the paper stresses the costs of the disinflation strategy, as measured by the central bank sizable foreign exchange intervention and the increase in Angola`s external liabilities that unfolded in the process. The paper also notes that non-oil fiscal deficits have remained very large. Looking to the future, the paper stresses the pressing need to reduce demand pressures stemming from sizable government spending on wages and salaries, goods and services, subsidies, and other current transfers to the economy. The prescribed fiscal consolidation effort is viewed as critical to curtail the non-oil fiscal deficit, reduce inflation expectations on a lasting basis, and avoid further foreign borrowing on commercial terms, including loans collateralized by future oil revenues.

Peru: Monetary and Exchange Rate Policies, 1930-1980

This paper reviews monetary and exchange rate policies in Peru in 1930-80. The review covers major transformations to the world economy, including the post-1929 crash and WWII, and changing economic paradigms, such as the collapse of the gold standard and the rise and fall of the Bretton Woods system of fixed exchange rates. The analysis emphasizes the lasting partnership between Peruvian policymakers and the Bretton Woods institutions, while stressing the local authorities’ ownership of final policy decisions. The review shows that, in general, during the fifty year period under analysis, the Peruvian authorities sought to deliver nominal exchange rate stability, even at the cost of introducing market distortions and/or incurring heavy losses in international reserves.