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Emerging Capital Markets in Turmoil : Bad Luck or Bad Policy? - Guillermo A. Calvo

Emerging Capital Markets in Turmoil

Bad Luck or Bad Policy?

Hardcover Published: 1st July 2005
ISBN: 9780262033343
Number Of Pages: 564
For Ages: 18+ years old

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Since the mid-1990s, emerging market economies have been hit by dramatic highs and lows: lifted by large capital inflows, then plunged into chaos by constrained credit and out-of-control exchange rates. The conventional wisdom about such crises is strongly influenced by the experience of advanced economies. In Emerging Capital Markets in Turmoil, Guillermo Calvo examines these issues instead from the perspective of emerging market economies themselves, taking into account the limitations and vulnerabilities these economies confront.A succession of crises -- Mexico in 1994-5, East Asia in 1997, Russia in 1998, and Argentina in 2001 -- prompted an urgent search in economic policy circles for cogent explanations. Calvo begins by laying the groundwork for a new approach to these issues. In the theoretical chapters that follow, he argues that financial crisis theory regarding emerging markets has progressed from focusing on such variables as fiscal deficits, debt sustainability, and real currency devaluation to stressing the role of the financial sector -- emphasizing stocks rather than flows as well as the role credibility plays in containing financial crises. He then returns to a more empirical analysis and focuses on exchange-rate issues, considering the advantages and disadvantages of flexible exchange rates for emerging market economies. Coming after a decade of ongoing crises, Calvo's timely reassessment of the importance of external factors in making emerging market economies safer from financial turmoil offers important policy lessons for dealing with inevitable future episodes of financial crises.

"A deeply thoughtful and engaging collection of essays from a justly celebrated academic economist and policymaker who, for seven years as #2 at the International Monetary Fund, flew into the eye of the greatest international financial storms of the modern era."--Kenneth S. Rogoff, Thomas D. Cabot Professor of Public Policy, Department of Economics, Harvard University

Prefacep. xi
Introductionp. 1
Early Rumblingsp. 17
Introduction to Part Ip. 19
Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factorsp. 21
Capital Inflows to Latin America: The 1970s and 1990sp. 67
The Beast Awakensp. 93
Introduction to Part IIp. 95
Capital Flows and Macroeconomic Management: Tequila Lessonsp. 99
Petty Crime and Cruel Punishment: Lessons from the Mexican Debaclep. 129
Capital Market Contagion and Recession: An Explanation of the Russian Virusp. 139
Sudden Stops, the Real Exchange Rate, and Fiscal Sustainability: Argentina's Lessonsp. 143
In Search of a Theoryp. 181
Introduction to Part IIIp. 183
Varieties of Capital-Market Crisesp. 187
Uncertain Duration of Reform: Dynamic Implicationsp. 211
Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stopsp. 227
Rational Contagion and the Globalization of Securities Marketsp. 243
Balance-of-Payments Crises in Emerging Markets: Large Capital Inflows and Sovereign Governmentsp. 283
Contagion in Emerging Markets: When Wall Street Is a Carrierp. 313
Explaining Sudden Stop, Growth Collapse, and BOP Crisis: The Case of Distortionary Output Taxesp. 329
The Exchange Rate and All Thatp. 353
Introduction to Part IVp. 355
Fixing for Your Lifep. 357
Capital Markets and the Exchange Rate with Special Reference to the Dollarization Debate in Latin Americap. 403
Fear of Floatingp. 431
The Mirage of Exchange Rate Regimes for Emerging Market Countriesp. 461
Parting Shotsp. 485
Globalization Hazard and Delayed Reform in Emerging Marketsp. 487
Sudden Stop, Contractionary Devaluation, and Time Inconsistencyp. 515
Sourcesp. 531
Indexp. 533
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780262033343
ISBN-10: 0262033348
Series: Emerging Capital Markets in Turmoil
Audience: Professional
For Ages: 18+ years old
Format: Hardcover
Language: English
Number Of Pages: 564
Published: 1st July 2005
Publisher: MIT Press Ltd
Country of Publication: US
Dimensions (cm): 22.9 x 15.2  x 3.2
Weight (kg): 0.89