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This paper assesses the non linear impact of external debt on growth using panel data for 93 developing countries. The estimates support a non-linear, hump-shaped relationship between debt and growth, especially when the debt burden is measured relative to GDP. For a country with average indebtedness, doubling the debt ratio reduces growth by a third to a half percentage point after controlling for endogeneity. Our findings also suggest that the average impact of debt becomes negative at about 160–170 percent of exports or 35–40 percent of GDP and the marginal impact of debt at about half of these value

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Since 1999, the IMF's staff has been tracking several early-warning-system (EWS) models of currency crisis. The results have been mixed. One of the long-horizon models has performed well relative to pure guesswork and to available non-model-based forecasts, such as agency ratings and private analysts' currency crisis risk scores. The data do not speak clearly on the other long-horizon EWS model. The two short-horizon private sector models generally performed poorly.

We use firm-level panel data for the manufacturing sector in four African countries to investigate whether exporting impacts on efficiency, and whether efficient firms self-select into the export market. Based on simultaneous estimation of a production function and an export regression, our preferred results indicate significant efficiency gains from exporting, which can be interpreted as learning by exporting. We show that modelling unobserved heterogeneity by a flexible approach is important for deriving this conclusion. A policy implication of our results is that Africa would gain from orientating its manufacturing sector towards exporting.

DISCLAIMER: Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate. The views expressed in Staff Discussion Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

We develop a model in which governments' financing needs exceed the socially optimal level because public resources are diverted to serve the narrow interests of the group in power. From a social welfare perspective, this results in undue pressure on the central bank to extract seigniorage. Monetary policy also suffers from an expansive bias, owing to the authorities' inability to precommit to price stability. Such a conjecture about the fiscal-monetary policy mix appears quite relevant in Africa, with deep implications for the incentives of fiscally heterogeneous countries to form a currency union. We calibrate the model to data for West Africa and use it to assess proposed ECOWAS monetary unions. Fiscal heterogeneity indeed appears critical in shaping regional currency blocs that would be mutually beneficial for all their members. In particular, Nigeria's membership in the configurations currently envisaged would not be in the interests of other ECOWAS countries unless it were accompanied by effective containment on Nigeria's financing needs. JEL classification: E58, E61, E62, F33Union mone´taire en Afrique de l'Ouest : qui pourrait gagner, qui pourrait perdre, et pourquoi? Les auteurs de´veloppent un mode`le dans lequel les besoins financiers des gouvernements de´passent le niveau socialement optimal parce que des ressources publiques sont de´tourne´es de manie`re a`servir les inte´reˆts e´troits du groupe au pouvoir. Dans une perspective de bien-eˆtre social, cela entraıˆne des pressions indues sur la banque centrale pour qu'elle extraie du seigneuriage. La politique mone´taire souffre Without implication, we would like to thank Ousmane Dore´, Dominique Guillaume, Benoıˆt Anne, Charalambos Tsangarides, and the participants at the conference on the 'Feasibility of Monetary Unions in African Regional Economic Communities,' organized by the UN Economic Commission for Africa (Accra, Ghana, 8-10 October 2002) for useful comments and discussions and Heather Milkiewicz for research assistance. We are also grateful to two anonymous referees for detailed comments that led to substantial improvements in the paper. The views expressed in this article do not commit any official institution.

This draft: 16 th December 2003 * World Bank. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent. ** Centre for the Study of African Economies.

Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty. Information onT HIS PAPER ANALYZES the impact of uncertainty on the investment behavior of Ghanaian manufacturing firms using a panel data set for the years 1994-95. Recent literature has focused on how uncertainty affects investment when capital expenditures are largely sunk or irreversible. The empirical analysis presented here explores the extent to which the investmentuncertainty relationship is affected by the degree of reversibility of a firm's capital expenditures, an issue that has not received much attention in the few existing firm-level studies of investment under uncertainty. Empirical methods for investigating the investment-uncertainty relationship are developed and applied to the example of Ghanaian manufacturing sector firms. The objectives are to test some of the theory's predictions as well as to explore questions on which theory is not conclusive. In addition, the paper tests whether a firm-level uncertainty variable that measures the entrepreneur's perceptions of risk is significant in the model estimation.