A counter-cyclical framework for a development-friendly international financial architecture

Jose Antonio Ocampo and Stephany Griffith-Jones

Working Papers from United Nations, Department of Economics and Social Affairs

Abstract: The major task of a development-friendly international financial architecture is to mitigate pro-cyclical effects of financial markets and open “policy space” for counter-cyclical macroeconomic policies in the developing world. This paper explores a series of policy instruments for this purpose: counter-cyclical prudential regulatory and supervisory frameworks; market mechanisms that better distribute the risk faced by developing countries through the business cycle; multilateral instruments that encourage more stable private flows; and better provision of counter-cyclical official liquidity. It also suggests that regional macroeconomic consultation, and common reserve funds or swap arrangements among developing countries can play a role in this regard.

Keywords: volatility; contagion; financial crises; counter-cyclical macroeconomic policies; counter­cyclical prudential regulation; GDP-indexed and local currency bonds; regional macroeconomic cooperation. (search for similar items in EconPapers)
JEL-codes: F3 F32 F4 F42 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2007-07
New Economics Papers: this item is included in nep-dev, nep-pke and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:une:wpaper:39

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