Globalization, macroeconomic performance, and the exchange rates of emerging economies
National Bureau of Economic Research, 2004 - Political Science - 26 pages
Among the developing countries of the world, those emerging markets that have sought some degree of integration into world finance are characterized by higher per capita incomes, higher long-run growth rates, and lower output and consumption volatility. These characteristics are more likely to be causes than effects of financial integration. The measurable gains from financial integration appear to be lower for emerging markets than for higher-income countries, and appear to have been limited by recent crises. One factor limiting the gains from financial integration is the difficulty emerging economies face in resolving the open-economy trilemma. Given their structural and institutional features, many emerging economies cannot live comfortably either with fixed or with freely floating exchange rates. Most recently, the exchange rates of several emerging countries display attempts at stabilization punctuated by high volatility in periods of market stress.
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Argentina Asian crisis Bekaert borrowing spread Bureau of Economic Calvo capita income capital controls capital markets Chile consumption and output consumption volatility convergence country groups currency depreciation devaluation developing countries Dfaz Alejandro dollar exchange rates domestic assets domestic currency economic growth Economic Research effects emerging countries emerging economies emerging markets group emerging-market exchange-rate expected depreciation external debt fear of floating Figure financial fragility financial globalization financial integration financial liberalization financial opening fixed exchange rates floating dollar exchange floating exchange rate foreign currency foreign debt foreign exchange market foreign investors foreign-currency gains from financial GDP volatility Growth Rates growth volatility high-income industrial countries institutional insular countries insular group liability dollarization long-run Macroeconomics Maurice Obstfeld Michael Woodford Monetary Policy National Bureau NBER NBER Working Papers nonindustrial output growth panic papers in hard Partial Subscription relative Rogoff sample stability Standard Deviations Stanley Fischer trend trilemma Ulrike Malmendier wealth effect