Editors' Summary‪.‬

THE BROOKINGS PANEL ON Economic Activity held its eighty-third conference in Washington, D.C., on March 29 and 30, 2007. This issue of the Brookings Papers includes the papers and discussions presented at the conference. The five papers in this issue span a range of domestic and global issues of current importance. The first paper uses risk analysis to assess the large foreign reserves holdings of emerging market countries. The second paper models the role of information technology in the rapid productivity growth of the past decade. The third paper examines the relation between foreign capital inflows and growth among nonindustrialized economies. The fourth paper estimates the effects of dividends on consumption and the implied effects of the 2003 dividend tax cuts. The final paper looks for explanations for the failure of long-term rates to respond as expected to the Federal Reserve's monetary tightening of recent years. IN 2005 THE INTERNATIONAL reserves of emerging market countries reached nearly $2 trillion, four times their level of the early 1990s relative to GDP. Some commentators have argued that such massive reserves are prudent insurance against the increased volatility of capital flows accompanying financial globalization, but others claim they are excessive and that these countries could put the funds to better use toward their economic development. In the first article of this issue, Olivier Jeanne examines whether the risk of currency crisis or a sudden cutoff in lending justifies the level of reserves held by these countries.