Financial Turmoil and the Choice of Exchange Rate Regime
Ricardo Hausmann (),
Carmen Pages and
Ernesto Stein ()
No 1108, IDB Publications (Working Papers) from Inter-American Development Bank
Financial turmoil is becoming a fact of life in Latin America. The 1990s have been characterized by enormous volatility in the magnitude and cost of capital flows. The correlation of capital swings across disparate countries suggests that the quality of emerging market policies in addition to global factors have been the main actors in this drama. Therefore, the blame for financial turmoil has moved away from inappropriate domestic policies. Instead, the paradigm has shifted to one of determining which policies - domestic or international - are most effective in taming the destabilizing effects of inherently volatile capital flows.
Keywords: Interest rates; Financial Crises & Structural Adjustement; Exchange rates; exchange rate flexibility; financial systems; currency crises; financial vulnerability (search for similar items in EconPapers)
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