An emphasis on exchange rate surveillance-a topic that has always been at the core of the IMF's mandate-received renewed impetus in the IMF's Medium-Term Strategy (MTS), 1 that called inter alia for stronger emphasis on multilateral surveillance, macrofinancial linkages, and the implications of globalization, reflecting the stronger economic ties among member countries brought about by the rapid increase in international trade and financial integration. The exchange rate analysis conducted by the IMF's Consultative Group on Exchange Rate Issues (CGER)-which was formed in the mid-1990s with a mandate to provide exchange rate assessments for a number of advanced economies from a multilateral perspective-has accordingly been expanded to cover both key advanced economies and major emerging market economies. This paper summarizes the methodologies that underpin this expanded analysis.This paper was prepared under the direction of Jonathan D. Ostry

^^^^Different European countries pay very different interest rates on their public debts. Will these differences disappear if and when exchange rates come to be irrevocably fixed in the European Monetary Union? Or rather will default risks in the high debt countries keep interest rates from converging? To answer this question, this paper investigates whether a perceived default risk is already priced by the market The paper compares the interest rates on public and private financial instruments denominated in the same currencies in 12 OECD countries. A strong correlation is found between the size of public indebtedness and the spread between public and private rates of return. This correlation suggests that the markets perceive a default risk on the public debt of some OECD countries. The size of this default risk is however very small.

Abstract-Are structural reforms growth enhancing? Is the effectiveness of reforms constrained by a country's distance from the technology frontier or by its institutional environment? This paper takes a new and comprehensive look at these questions by employing a novel data set that includes several kinds of real (trade, agriculture, and networks) and financial (domestic finance, banking, securities, and capital account) reforms for an extensive list of developed and developing countries, going back to the early 1970s. First-pass evidence based on growth breaks analysis and on panel growth regressions suggests that on average, both real and financial sector reforms are positively associated with higher growth. However, on several occasions, botched reforms resulted in growth disasters. More important, the positive reform-growth relationship is shown to be highly heterogeneous and to be influenced by a country's constraints on the authority of the executive power and by its distance from the technology frontier. Finally, there is some evidence that crises, defined as severe growth downturns, are associated with subsequent reform upticks.

High debt countries may face the risk of self-fulfilling debt crises. If the public expects that in the future the government will be unable to roll over the maturing debt, they may refuse to buy debt today and choose to hold foreign assets. This lack of confidence may then be self-fulfilling. This paper argues that under certain conditions, the occurrence of a confidence crisia is more likely if the average maturity of the debt is short. On the contrary, a long and evenly distributed maturity structure may reduce such a risk. We consider the recent Italian experience from this perspective. In particular we ask whether recent develnpmencs in che market for government debt ahoy signa of unstable public confidence, and of a risk premium.

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