ABSTRACT
The Fund staff constructed several partial-and general-equilibrium models of developing countries in the 1970s and 1980s. Two circumstances combined to spur this activity: Fund lending shifted heavily toward the developing world, which raised the demand by the Executive Board for detailed quantitative analysis of those economies, and the quantity and quality of data improved by enough to support the estimation of at least rudimentary empirical models. Several early studies, such as Khan (1974) on Venezuela and Otani and Park (1976) on Korea, focused on the linkages between monetary policy and economic activity and inflation. By the 1980s, more comprehensive macroeconomic models were appearing, such as Khan and Knight (1981). Simultaneously with the empirical studies, Fund staff were conducting basic theoretical research on the structure of developing economies and the differences between modeling industrial and developing countries. That work culminated in a series of papers in the early 1990s, collected in Khan, Montiel and Haque(1991).
