The views expressed in this Working Paper are those of the author(s) and do not necessarily repres~nt those ofthe IMP or IMP policy. Working Papers describe research in progress by the author(s) and are Dublished to elicit comments and to further debate. This paper examines determinants of inflation in Ukraine during 1993-2002 in a co integrating framework. Two basic theoretical models-a markup and a money market model-are tested. While broad money is cointegrated with the cpr for the whole sample and for early subsamples, the cointegration ceases to be statistically significant between 1996-2002, in part because of strong remonetization. The mark-up model offers a more consistent and well-fitling overall framework for 1996-2002 data, pointing inter alia to a greater role of administered prices in the cpr within a fairly mainstream inflation process.The "long-term" monetary transmission mechanism operates through the exchange rate and wages, but broad money clearly enters short-term inflation determinants. Prudent macroeconomic policies, grain harvests, and administrative decisions explain the sharp decline of inflation over 2000-2002.

T he role of the World Trade Organization (WTO) in international trade has recently come under increased scrutiny. In a provocative study, Rose (2002) concluded-on the basis of a gravity model-that the effect of the WTO on trade was insignificant. This result was disputed by several authors. 1 In particular, Subramanian and Wei (2003) employed an augmented specification of the gravity model to estimate the relationship between trade and WTO membership. These

ix ©International Monetary Fund. Not for Redistribution 2 Immigration is unlikely to be a permanent solution because ultimately immigrants would be subject to the aging process, thereby adding pressures on pension and health care systems.

Outward migration has been an important phenomenon for countries in Latin American and the Caribbean (LAC), particularly those in Central America and the Caribbean. This paper examines recent trends in outward migration from and remittances to LAC, as well as their costs and benefits. For the home country, the negative impact from emigration on labor resources and productivity seems to outweigh growth gains from remittances, notably for the Caribbean. However, given emigration, remittance flows play key financing and stabilizing roles in Central America and the Caribbean. They facilitate private consumption smoothing, support financial sector stability and fiscal revenues, and help reduce poverty and inequality, without strong evidence for harmful competitiveness effects through shifts in the real exchange rate. IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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