Financial liberalisation – The dilemmas of national adaptation
This study explores two of the main issues of global financial processes: the economic essence of the benefits gained from the increased liberalisation of international capital flow, and the issue of “adequate” exchange rate systems as closely aligned with the increased international capital flow as possible. Conclusions are in part theoretical and in part practical. The study confirms the statement that the liberalisation of capital flow and the exchange rate policy to be realised continue to be highly problematic to this day. There is no uniform and theoretically well-grounded position that could properly describe the liberalization of capital transactions or the adequate exchange system to be implemented from all possible angles. The so-called ‘impossible trinity’, the peculiar difficulty of the simultaneous following of foreign and domestic goals is increasingly present in small open economies such as the Hungarian economy for example. Due to the high degree of international financial integration, domestic and foreign loan demand and upturn cannot be regulated by such traditional tools as interest and fiscal economy stimulating measures, that is, by such simultaneous measures as point in the same direction and do not act against one another. This is increasingly reflected in Hungary by the difficulties encountered in the country’s interest policy and HUF and foreign currency lending. At the same time, current economic policy cannot shy away from the obligation to find a balance between domestic and external goals that can be maintained in a changing global financial environment. However, there is no “royal road” for economic policy. This statement is true for the role played by the central bank as well, which is aimed at the management of banking system-level risks caused by the inflated Hungarian foreign currency debt.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pablo A. Guerron-Quintana & Martin Uribe & Juan Rubio-Ramirez & Jesús Fernández-Villaverde, 2009.
"Risk Matters: The Real E¤ects of Volatility Shocks,"
2009 Meeting Papers
237, Society for Economic Dynamics.
- Jesus Fernandez-Villaverde & Pablo Guerron-Quintana & Juan F. Rubio-Ramirez & Martin Uribe, 2011. "Risk Matters: The Real Effects of Volatility Shocks," American Economic Review, American Economic Association, vol. 101(6), pages 2530-61, October.
- Jesus Fernandez-Villaverde & Pablo Guerron-Quintana & Juan F. Rubio-Ramírez & Martin Uribe, 2009. "Risk Matters: The Real Effects of Volatility Shocks," PIER Working Paper Archive 09-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Jesús Fernández-Villaverde & Pablo A. Guerrón-Quintana & Juan Rubio-Ramírez & Martín Uribe, 2009. "Risk Matters: The Real Effects of Volatility Shocks," NBER Working Papers 14875, National Bureau of Economic Research, Inc.
- Fernández-Villaverde, Jesús & Guerron-Quintana, Pablo A. & Rubio-Ramírez, Juan Francisco & Uribe, Martín, 2009. "Risk Matters: The Real Effects of Volatility Shocks," CEPR Discussion Papers 7264, C.E.P.R. Discussion Papers.
- Pablo Guerron & Martin Uribe & Juan Rubio-Ramirez & Jesus Fernandez-Villaverde, 2010. "Risk Matters: The Real Effects of Volatility Shocks," 2010 Meeting Papers 281, Society for Economic Dynamics.
- Valentinyi, Ákos & Bihari, Péter, 2010.
"Pirruszi dezinfláció vagy tartósan alacsony inflációs környezet?
[Pyrrhic deflation or a persistently low-inflation environment?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 868-875.
- Blanchard, Olivier J., 1984.
"Current and anticipated deficits, interest rates and economic activity,"
European Economic Review,
Elsevier, vol. 25(1), pages 7-27, June.
- Olivier J. Blanchard, 1991. "Current and Anticipated Deficits, Interest Rates and Economic Activity," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 361-390 National Bureau of Economic Research, Inc.
- Olivier J. Blanchard, 1984. "Current and Anticipated Deficits, Interest Rates and Economic Activity," NBER Working Papers 1265, National Bureau of Economic Research, Inc.
- Maurice Obstfeld & Alan M. Taylor, 2002.
"Globalization and Capital Markets,"
NBER Working Papers
8846, National Bureau of Economic Research, Inc.
- Erdős, Tibor, 2010.
"Forintárfolyam, kamatszint és devizaalapú eladósodás. Az árfolyam szerepéről
[Forint exchange rates, interest levels and foreign currency-based debt. The role of the exchange rate]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 847-867.
- Laszlo Csaba, 2011. "Financial institutions in transition: the long view," Post-Communist Economies, Taylor & Francis Journals, vol. 23(1), pages 1-13.
- Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010.
"A New Database of Financial Reforms,"
IMF Staff Papers,
Palgrave Macmillan, vol. 57(2), pages 281-302, June.
- Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises; A New Database," IMF Working Papers 08/224, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:pfq:journl:v:56:y:2011:i:2:p:214-240. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pál Péter Kolozsi)The email address of this maintainer does not seem to be valid anymore. Please ask Pál Péter Kolozsi to update the entry or send us the correct address
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.