Emerging capital markets in turmoil : bad luck or bad policy / Guillermo A. Calvo.

Format:

Book

Author/Creator:

Calvo, Guillermo A., author.

Language:

English

Subjects (All):

Financial crises.

Capital market.

Financial crises--Developing countries.

Developing countries.

Capital market--Developing countries.

Physical Description:

1 online resource (xiii, 547 pages) : illustrations

Place of Publication:

Cambridge, Mass. : MIT Press, [2005]

System Details:

text file

Summary:

Analysis of financial crises in emerging market economies, including Mexico, Argentina, and Russia; traces the evolution of crisis theory and challenges the conventional wisdom.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.

Contents:

I Early Rumblings 17

1 Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors / Leonardo Leiderman, Carmen M. Reinhart 21

2 Capital Inflows to Latin America: The 1970s and 1990s / Leonardo Leiderman, Carmen M. Reinhart 67

II The Beast Awakens 93

3 Capital Flows and Macroeconomic Management: Tequila Lessons 99

4 Petty Crime and Cruel Punishment: Lessons from the Mexican Debacle / Enrique G. Mendoza 129

5 Capital Market Contagion and Recession: An Explanation of the Russian Virus 139

6 Sudden Stops, the Real Exchange Rate, and Fiscal Sustainability: Argentina's Lessons / Alejandro Izquierdo, Ernesto Talvi 143

III In Search of a Theory 181

7 Varieties of Capital-Market Crises 187

8 Uncertain Duration of Reform: Dynamic Implications / Allan Drazen 211

9 Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops 227

10 Rational Contagion and the Globalization of Securities Markets / Enrique G. Mendoza 243

11 Balance-of-Payments Crises in Emerging Markets: Large Capital Inflows and Sovereign Governments 283

12 Contagion in Emerging Markets: When Wall Street Is a Carrier 313

13 Explaining Sudden Stop, Growth Collapse, and BOP Crisis: The Case of Distortionary Output Taxes 329

IV The Exchange Rate and All That 353

14 Fixing for Your Life / Carmen M. Reinhart 357

15 Capital Markets and the Exchange Rate with Special Reference to the Dollarization Debate in Latin America 403

16 Fear of Floating / Carmen M. Reinhart 431

17 The Mirage of Exchange Rate Regimes for Emerging Market Countries / Frederic S. Mishkin 461

V Parting Shots 485

18 Globalization Hazard and Delayed Reform in Emerging Markets 487

19 Sudden Stop, Contractionary Devaluation, and Time Inconsistency 515.

Notes:

OCLC-licensed vendor bibliographic record.

ISBN:

9780262269728

0262269724

1423746783

9781423746782

0262033348

9780262033343

OCLC:

62872806

Access Restriction:

Restricted for use by site license.