The Consequences of the Global Financial Crisis

The Rhetoric of Reform and Regulation

Author: Wyn Grant,Graham K. Wilson

Publisher: Oxford University Press

ISBN: 0199641986

Category: Business & Economics

Page: 272

View: 4206

Systematically exploring the consequences of the global financial crisis, this text focuses primarily on the impact on policy and politics. It asks how governments responded to the challenges that the crisis has posed, and the policy and political impact of the combination of both the crisis itself and these responses.

Ruling Capital

Emerging Markets and the Reregulation of Cross-Border Finance

Author: Kevin P. Gallagher

Publisher: Cornell University Press

ISBN: 0801454603

Category: Political Science

Page: 232

View: 331

In Ruling Capital, Kevin P. Gallagher demonstrates how several emerging market and developing countries (EMDs) managed to reregulate cross-border financial flows in the wake of the global financial crisis, despite the political and economic difficulty of doing so at the national level. Gallagher also shows that some EMDs, particularly the BRICS coalition, were able to maintain or expand their sovereignty to regulate cross-border finance under global economic governance institutions. Gallagher combines econometric analysis with in-depth interviews with officials and interest groups in select emerging markets and policymakers at the International Monetary Fund, the World Trade Organization, and the G-20 to explain key characteristics of the global economy. Gallagher develops a theory of countervailing monetary power that shows how emerging markets can counter domestic and international opposition to the regulation of cross-border finance. Although many countries were able to exert countervailing monetary power in the wake of the crisis, such power was not sufficient to stem the magnitude of unstable financial flows that continue to plague the world economy. Drawing on this theory, Gallagher outlines the significant opportunities and obstacles to regulating cross-border finance in the twenty-first century.

Finance and Competitiveness in Developing Countries

Author: José María Fanelli,Rohinton Medhora

Publisher: Routledge

ISBN: 1134550235

Category: Business & Economics

Page: 384

View: 703

This volume represents a uniquely thorough investigation of trade and financial policy as it impacts upon Third World development. A broad range of international case studies (including Indonesia, Uruguay and Tunisia) offer a wealth of empirical material and statistical information. Thematic discussion chapters build on these case studies, offering important analysis of topics such as trade specialization and industrial change.

Malaysia: From Crisis to Recovery

Author: Intl Monetary Fund,Kanitta Meesook,Natalia T. Tamirisa,Yougesh Khatri,Il Houng Lee,O. Liu,Michael Moore,Mark H. Krysl

Publisher: International Monetary Fund

ISBN: 9781589060470

Category: Business & Economics

Page: 101

View: 830

This publication takes stock of economic developments in Malaysia since the Asian economic crisis of 1997. It looks at the aspects of economic performance, policy and reform that contributed to the strong recovery. The individual papers include: a comparative review of policies and performance; potential output and inflation; challenges to fiscal management; capital controls in response to the Asian crisis; financial sector issues; corporate performance and reform.

Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China

Author: Mr. Eswar Prasad,Mr. Qing Wang,Mr. Thomas Rumbaugh

Publisher: International Monetary Fund

ISBN: 1452762449

Category: Business & Economics

Page: 32

View: 8823

This paper reviews the issues involved in moving towards greater exchange rate flexibility and capital account liberalization in China. A more flexible exchange rate regime would allow China to operate a more independent monetary policy, providing a useful buffer against domestic and external shocks. At the same time, weaknesses in China’s financial system suggest that capital account liberalization poses significant risks and should be a lower priority in the short term. This paper concludes that greater exchange rate flexibility is in China’s own interest and that, along with a more stable and robust financial system, it should be regarded as a prerequisite for undertaking a substantial liberalization of the capital account.

International Evidenceon Recovery From Recessions

Author: Ms. Valerie Cerra,Ms. Sweta Chaman Saxena,Ugo Panizza

Publisher: International Monetary Fund

ISBN: 1451917554

Category: Business & Economics

Page: 30

View: 2033

Although negative shocks have persistent effects on output on average, this paper shows that macroeconomic policies and the structure of the economy can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that are asymmetrically stronger than in nonrecovery years. Real depreciation and the exchange rate regime also have asymmetric growth effects in a recovery year relative to other years of expansion. Recoveries are more sluggish in open economies, partly because fiscal policy is less effective than in closed economies.

Exchange Rate Regimes and the Stability of the International Monetary System

Author: Mr. Atish R. Ghosh,Mr. Jonathan David Ostry,Mr. Charalambos G. Tsangarides

Publisher: International Monetary Fund

ISBN: 145198524X

Category: Business & Economics

Page: 47

View: 9784

The member countries of the International Monetary Fund collaborate to try to assure orderly exchange arrangements and promote a stable system of exchange rates, recognizing that the essential purpose of the international monetary system is to facilitate the exchange of goods, services, and capital, and to sustain sound economic growth. The paper reviews the stability of the overall system of exchange rates by examining macroeconomic performance (inflation, growth, crises) under alternative exchange rate regimes; implications of exchange rate regime choice for interaction with the rest of the system (external adjustment, trade integration, capital flows); and potential sources of stress to the international monetary system.

Capital-account and Counter-cyclical Prudential Regulations in Developing Countries

Author: José Antonio Ocampo,United Nations. Economic Commission for Latin America and the Caribbean

Publisher: United Nations Publications

ISBN: 9789211213928

Category: Business cycles

Page: 36

View: 3093

This paper examines the use of capital account regulations and the counter-cyclical prudential regulation of domestic financial intermediaries. It explains how these two finance policy tools are used to manage capital account volatility in developing countries.

Private Capital Flows and Development

The Role of National and International Polices

Author: Gerald K. Helleiner

Publisher: Commonwealth Secretariat

ISBN: 9780850925395

Category: Capital movements

Page: 40

View: 9767

This paper considers the new forms and roles of private capital flows to developing countries in the 1990s and appropriate national and international policy responses to the problems and possibilities they create. Section 2 describes the growth of these flows in the 1990s, their role in development and some of their effects in recipient countries. Section 3 considers alternate capital account policies for developing countries. In section 4 the possibility of improved international arrangements is considered. Section 5 contains recommendations from the previous analysis.

The Currency Composition of Foreign Exchange Reserves - Retrospect and Prospect

Author: Barry J. Eichengreen,Donald J. Mathieson

Publisher: International Monetary Fund


Category: Bank reserves

Page: 34

View: 4200

This paper examines the determinants of the currency composition of international reserves. Our single most important finding is the striking stability over time of the relationship between the demand for reserves denominated in different currencies and its principal determinants: trade flows, financial flows and currency pegs. This result contrasts sharply with recent predictions of sharp shifts in the currency composition of central banks’ holdings of foreign exchange. The message would seem to be that in this, as in other respects, the international monetary system is in a mode of gradual, continuous evolution, not of rapid, discontinuous change.

Management of Capital Flows

Comparative Experiences and Implications for Africa

Author: United Nations Conference on Trade and Development

Publisher: United Nations Publications

ISBN: 9789211125948

Category: Africa

Page: 388

View: 1749

This publication contains seven papers presented at a workshop jointly organised by UNCTAD and the Government of Egypt, held in Cairo on 20-21 March 2001. Subjects discussed include: corporate governance in emerging markets; the OECD experience with capital account liberalisation; capital account management in India and Malaysia; the Chinese economy, financial sector restructuring and international investment; post-crisis financial reforms in South Korea; public debt and macroeconomic management in sub-Saharan Africa; capital flows, capital accounts and foreign exchange regimes in Africa.

Who Needs to Open the Capital Account

Author: Olivier Jeanne,Arvind Subramanian,John Williamson

Publisher: Peterson Institute

ISBN: 0881326488

Category: Capital

Page: 147

View: 774

Most countries emerged from the Second World War with capital accounts that were closed to the rest of the world. Since then, a process of capital account opening has occurred, with the result that all developed and many emerging-market countries now have capital accounts that are both de facto and de jure open, while many developing countries also have de facto openness. This study examines this in part by considering some of the first lessons from the current global financial crisis. This crisis may change the terms of the debate on capital account liberalization in a deeper and more lasting way than any of the crises of the past two decades because it may mark a reversal in the secular trend of financial liberalization at the core of the international financial system. The current crisis also raises new questions about the appropriate policy responses to boom-bust dynamics in domestic credit and in international credit flows. Intellectual consistency is needed between the domestic and international dimensions of financial regulation and the policies aimed at dealing with boom-bust dynamics in domestic and international credit.

Implications of a Surge in Capital Inflows

Available tools and Consequences for the Conduct of Monetary Policy

Author: Jang-Yung Lee

Publisher: International Monetary Fund

ISBN: 1455262595

Category: Business & Economics

Page: 66

View: 4062

This paper seeks to extend discussion of monetary policy instruments to the situation of a country faced with major capital inflows when the process of domestic financial liberalization is incomplete. It briefly summarizes the recent usage of traditional monetary instruments, discusses the practical limits to classic sterilization measures as well as the pros and cons of using other supplementary measures including tax-based controls on capital inflows. It also examines the efficacy of such measures in Chile, Colombia, Indonesia, Korea, Spain, and Thailand. The conclusion is that, for a time and as a transitional measure, a country may find it opportune to supplement the traditional instruments with certain “belt and braces” measures including, in some instances, indirect (tax-based) capital controls.

Crisis and Recovery in Malaysia

The Role of Capital Controls

Author: Prema-chandra Athukoralge

Publisher: Edward Elgar Publishing

ISBN: 9781781009666

Category: Business & Economics

Page: 159

View: 6123

'Professor Athukorala tells a fascinating story of one of the most successful economies in the world economy in the last decades, from the inception of its liberalisation policy to its radical decision to pursue an independent recovery path after the 1997 Asian financial crisis. This is case-study economics at its best. The book is superbly organised, meticulously researched and clearly written; a treat for professional economists and policymakers alike.' - Tony Thirlwall, University of Kent, UK 'Malaysia is one of the great success stories of the last quarter of the twentieth century. From 1988 it had one of the highest growth rates in the world, and it managed to maintain ethnic peace in an undoubtedly difficult environment. Recently it has provided a major laboratory experiment of the use of capital controls at a time of crisis when a country is highly integrated in the world capital market. This excellent book presents the first careful analysis of the nature and effects of these controls, as well as providing a thorough background of how the Asian crisis played out in Malaysia.' - W.Max Corden, The Johns Hopkins University, US In the light of the Malaysian experience during the Asian financial crisis, this book examines the role of international capital mobility in making countries susceptible to financial crises and the use of capital controls as a crisis management tool. Malaysia provides an interesting case study of this subject given its significant capital market liberalisation prior to the onset of the crisis, and its fundamental shift in crisis management policy in September 1998. The prime focus of the book is on Malaysia's radical policy decision to pursue an independent recovery path, cut off from world markets by a system of capital control, as a viable alternative to the conventional market centred approach. The analysis suggests that, against the initial dire predictions of many economists, the capital controls have actually played a crucial supportive role in crisis management. Whether the controls have played a special role in delivering a superior recovery outcome in Malaysia compared to IMF-program countries remains a point of contention. However, there is strong evidence to suggest that this pragmatic policy choice was instrumental in achieving recovery, while minimising potential economic disruption and related social costs.

Capital Account Liberalization, Capital Flow Patterns, and Policy Responses in the EU's New Member States

Author: Zsófia Árvai

Publisher: International Monetary Fund

ISBN: 1451907680

Category: Business & Economics

Page: 42

View: 5504

This paper discusses the experience of the EU''s eight new member countries (EU8) between 1995 and 2003 when the bulk of capital account liberalization took place, focusing on interest-rate-sensitive portfolio flows and financial flows. It takes stock of the lessons from capital flow patterns to draw policy conclusions. There were two distinct groups in terms of the speed of capital account liberalization: rapid liberalizers and cautious liberalizers. The speed of disinflation and the level of public debt were major determinants of the size of interest-rate-sensitive portfolio inflows. Monetary and exchange rate policies were the main instruments used to react to large interest-sensitive inflows, whereas fiscal tightening was seldom used as a direct reaction to inflows.

Financial Globalization and the Emerging Economies

Author: José Antonio Ocampo,Institut international Jacques Maritain,United Nations. Economic Commission for Latin America and the Caribbean

Publisher: United Nations Publications

ISBN: 9789211212655

Category: Capital market

Page: 328

View: 2289

Financial globalisation has been a dynamic element in recent years, with large capital flows to a number of emerging economies in Latin America and Asia often being followed by financial crises.

Country Risks and the Investment Activity of U.S. Multinationals in Developing Countries

Author: Mr. Alexander Lehmann

Publisher: International Monetary Fund

ISBN: 1451900694

Category: Business & Economics

Page: 27

View: 8394

This paper develops a simple real options model that demonstrates the role of country-specific risk and sunk costs in determining a multinational’s choice between exports and foreign investment. The hypotheses from the model are tested for the distribution of capital expenditures by U.S.-owned foreign affiliates in 29 developing countries during 1984–95. Political and economic risk ratings are identified as deterrents to foreign capital formation; scale economies, unit wage differentials, trade openness, and agglomeration effects are found to be stimulating. These findings provide an additional rationale for a multilateral investment agreement that could function as an agency of restraint.

Sequencing Capital Account Liberalization

Lessons From the Experiences in Chile, Indonesia, Korea, and Thailand

Author: Claudia Echeverria,Mr. Salim M. Darbar,Mr. R. B. Johnston

Publisher: International Monetary Fund

ISBN: 145190259X

Category: Business & Economics

Page: 115

View: 8862

This paper examines issues in sequencing and pacing capital account liberalization and draws lessons from experience in four countries (Chile, Indonesia, Korea, and Thailand). The paper focuses on the interrelationship between capital account liberalization, domestic financial sector reforms, and the design of monetary and exchange rate policy. It concludes that capital account liberalization should be approached as an integrated part of comprehensive reform strategies and should be paced with the implementation of appropriate macroeconomic and exchange rate policies.

Financial Repression and Exchange Rate Management in Developing Countries

Theory and Empirical Evidence for India

Author: Ms. Renu Kohli,Kenneth Kletzer

Publisher: International Monetary Fund

ISBN: 1451898304

Category: Business & Economics

Page: 42

View: 2735

Most developing countries have imposed restrictions on domestic and international financial transactions at one time or another. Such restrictions have allowed governments to generate significant proportions of their revenues from financial repression while restraining inflation. The eventual fiscal importance of the revenues from seignorage and from implicit taxation of financial intermediation pose a challenge for financial reform and liberalization. This paper presents a model of the role of financial repression in fiscal policy and exchange rate management under capital controls. We show how a balance of payments crisis arises under an exchange rate peg without capital account convertibility in the model economy and how the instruments of financial repression may be used for exchange rate management. The model is compared to the experience of India, a country that exemplifies the fiscal importance of financial restrictions, in the last two decades. In particular, we discuss the dynamics leading up to devaluation in 1991 and the role of financial repression in exchange rate intervention afterwards.