A counter-cyclical framework for a development-friendly international financial architecture
AbstractThe 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.
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Bibliographic InfoPaper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number 39.
Length: 21 pages
Date of creation: Jul 2007
Date of revision:
volatility; contagion; financial crises; counter-cyclical macroeconomic policies; countercyclical prudential regulation; GDP-indexed and local currency bonds; regional macroeconomic cooperation.;
Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-18 (All new papers)
- NEP-DEV-2007-06-18 (Development)
- NEP-PKE-2007-06-18 (Post Keynesian Economics)
- NEP-REG-2007-06-18 (Regulation)
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