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Crescita e vincolo esterno: quali strategie per promuovere stabilità macroeconomica, competitività e investimenti

  • Fabrizio Onida

    (Università Bocconi,)

A high share of foreign currency denomination of domestic public debt in rules out any recourse to inflation tax as an effective adjustment device. Anti- inflation policies based upon hard peg regimes may remove the exchange rate risk in the short run but - as pointed out by Argentina’s currency board crisis at the beginning of the current decade - cannot avoid the default risk, mirrored in the spread between yields on domestic bonds and benchmark bonds such as US Treasury Bills. Alternatively, for any degree of fiscal discipline, adjustable peg or freely floating exchange rate regimes may be successful only if the passthrough from a depreciating exchange to domestic prices and wages is kept under control. Temporary and well targeted controls on short-term external capital movements, such as those successfully managed by Chile and Malaysia, may help to overcome the most acute phase of crisis adjustment. Debt- for-equity swaps and their variants such as debt- for-development or debt- for-nature swaps, involving both public and private lenders, may give an effective although quite limited support to adjustment policies in over- indebted developing countries. strategies and oligopolistic rivalry.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 157.

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Length: 35 pages
Date of creation: Jul 2004
Date of revision: Jul 2004
Handle: RePEc:cri:cespri:wp157
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  1. Sebastian Edwards, 2000. "Capital Flows, Real Exchange Rates, and Capital Controls: Some Latin American Experiences," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 197-246 National Bureau of Economic Research, Inc.
  2. Enrique G. Mendoza, 2002. "Why Should Emerging Economies Give Up National Currencies?: A Case for "Institutions Substitution"," IDB Publications (Working Papers) 6822, Inter-American Development Bank.
  3. Ricardo J.Caballero, 2001. "Macroeconomic volatility in Latin America: a view and three case studies," Estudios de Economia, University of Chile, Department of Economics, vol. 28(1 Year 20), pages 5-52, June.
  4. Andrew Berg & Paolo Mauro & Eduardo Borensztein, 2002. "An Evaluation of Monetary Regime Options for Latin America," IMF Working Papers 02/211, International Monetary Fund.
  5. Enrique G. Mendoza, 2002. "Why Should Emerging Economies Give up National Currencies: A Case for 'Institutions Substitution'," NBER Working Papers 8950, National Bureau of Economic Research, Inc.
  6. Sebastian Edwards, 1992. "Capital Flows, Foreign Direct Investment, and Debt-Equity Swaps in Developing Countries," NBER Working Papers 3497, National Bureau of Economic Research, Inc.
  7. Sebastian Edwards, 1999. "How Effective are Capital Controls?," NBER Working Papers 7413, National Bureau of Economic Research, Inc.
  8. Reinhart, Carmen & Calvo, Guillermo, 1999. "Capital Flow Reversals,the Exchange Rate Debate,and Dollarization," MPRA Paper 8951, University Library of Munich, Germany.
  9. Ffrench-Davis, Ricardo, 1990. "Debt-Equity Swaps in Chile," Cambridge Journal of Economics, Oxford University Press, vol. 14(1), pages 109-26, March.
  10. Ricardo J. Caballero, 2000. "Macroeconomic Volatility in Latin America: A View and Three Case Studies," IDB Publications (Working Papers) 6863, Inter-American Development Bank.
  11. Morris Goldstein, 2003. "Debt Sustainability, Brazil, and the IMF," Working Paper Series WP03-1, Peterson Institute for International Economics.
  12. Jose De Gregorio & Sebastian Edwards & Rodrigo O. Valdes, 2000. "Controls on Capital Inflows: Do they Work?," NBER Working Papers 7645, National Bureau of Economic Research, Inc.
  13. Guillermo Calvo & Frederic S. Mishkin, 2003. "The Mirage of Exchange Rate Regimes for Emerging Market Countries," NBER Working Papers 9808, National Bureau of Economic Research, Inc.
  14. Guillermo A. Calvo & Carlos A. Vegh, 1999. "Inflation Stabilization and BOP Crises in Developing Countries," NBER Working Papers 6925, National Bureau of Economic Research, Inc.
  15. Eduardo Borensztein & Andrew Berg, 2000. "The Pros and Cons of Full Dollarization," IMF Working Papers 00/50, International Monetary Fund.
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