IDEAS home Printed from https://ideas.repec.org/p/ecr/col093/34817.html
   My bibliography  Save this paper

Developing countries' anti-cyclical policies in a globalized world

Author

Listed:
  • Ocampo, José Antonio

Abstract

Introduction The volatility and contagion characteristic of international financial markets, which dominated emerging economies during the 1990s, have deep historical roots.1 Indeed, from the mid-1970s to the end of the 1980s, Latin America and many other regions in the developing world experienced a long boom-bust cycle, the most severe of its kind since that of the 1920s and 1930s. The shortening but also the intensity of boom-bust cycles have been distinctive features of the past decade. The latter is reflected, in the words of the Chairman of the Federal Reserve Board, in the fact that the size of the breakdowns and required official finance to counter them is of a different order of magnitude than in the past" (Greenspan, 1998). Viewed from the perspective of developing countries, the essential feature of instability is the succession of periods of intense capital inflows, in which financial risks significantly increase, facilitated and sometimes enhanced by pro-cyclical domestic macroeconomic policies, and the latter phases of adjustment, in which these risks are exposed and the pro-cyclical character of the measures adopted to "restore confidence" amplify the flow (economic activity)and stock (portfolio) effects of adjustment processes. An essential part of the solution to these problems lies in strengthening the institutional framework to prevent and manage financial crises at the global level.2 This paper, however, looks at the role of developing countries'domestic policies in managing externally generated boom-bust cycles. It draws upon extensive recent literature on the subject 3 and upon the experience of Latin America in the 1990s.4 The discussion is divided into seven sections. The first looks at the macroeconomics of boom-bust cycles in the developing world. The following sections look at the exchange rate regime, liability policies, prudential regulation and supervision, and fiscal stabilization. The final section draws some conclusion
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ocampo, José Antonio, 2001. "Developing countries' anti-cyclical policies in a globalized world," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34817, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  • Handle: RePEc:ecr:col093:34817
    as

    Download full text from publisher

    File URL: http://repositorio.cepal.org/handle/11362/34817
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. -, 2000. "Equity, development and citizenship," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 14969 edited by Eclac.
    2. Nora Lustig, 2000. "Crises and the Poor: Socially Responsible Macroeconomics," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 1-30, August.
    3. Budnevich, Carlos & Le Fort Varela, Guillermo, 1997. "Fiscal policy and the economic cycle in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    4. Jeffrey A. Frankel, 1999. "No Single Currency Regime is Right for All Countries or At All Times," NBER Working Papers 7338, National Bureau of Economic Research, Inc.
    5. De Gregorio, Jose & Edwards, Sebastian & Valdes, Rodrigo O., 2000. "Controls on capital inflows: do they work?," Journal of Development Economics, Elsevier, vol. 63(1), pages 59-83, October.
    6. Krugman, Paul & Taylor, Lance, 1978. "Contractionary effects of devaluation," Journal of International Economics, Elsevier, vol. 8(3), pages 445-456, August.
    7. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
    8. Cardenas, Mauricio & Barrera, Felipe, 1997. "On the effectiveness of capital controls: The experience of Colombia during the 1990s," Journal of Development Economics, Elsevier, vol. 54(1), pages 27-57, October.
    9. José Antonio Ocampo, 2000. "Recasting the International Financial Agenda," SCEPA working paper series. 2000-18, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    10. Ethan Kaplan & Dani Rodrik, 2002. "Did the Malaysian Capital Controls Work?," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 393-440, National Bureau of Economic Research, Inc.
    11. John Williamson, 2000. "Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa60.
    12. Sachs, Jeffrey & Tornell, Aaron & Velasco, Andres, 1996. "The Mexican peso crisis: Sudden death or death foretold?," Journal of International Economics, Elsevier, vol. 41(3-4), pages 265-283, November.
    13. Oliver E. Williamson, 2000. "Ronald Harry Coase: international economist/institutional builder," Chapters, in: Claude Ménard (ed.), Institutions, Contracts and Organizations, chapter 6, Edward Elgar Publishing.
    14. Eatwell, John & Taylor, Lance (ed.), 2002. "International Capital Markets: Systems in Transition," OUP Catalogue, Oxford University Press, number 9780195154986, Decembrie.
    15. Reinhart, Carmen & Montiel, Peter, 2001. "The Dynamics of Capital Movements to Emerging Economies During the 1990s," MPRA Paper 7577, University Library of Munich, Germany.
    16. Mr. Graham C. Scott, 1996. "Government Reform in New Zealand," IMF Occasional Papers 1996/009, International Monetary Fund.
    17. Boris Pleskovic & Joseph E. Stiglitz, 2000. "Annual World Bank Conference on Development Economics 1999," World Bank Publications - Books, The World Bank Group, number 13839, December.
    18. Gabriel Palma, 2000. "The Three Routes to Financial Crises: The Need for Capital Controls," SCEPA working paper series. 2000-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    19. Dani Rodrik & Andres Velasco, 1999. "Short-Term Capital Flows," NBER Working Papers 7364, National Bureau of Economic Research, Inc.
    20. Barry J. Eichengreen, 1999. "Toward a New International Financial Architecture: A Practical Post-Asia Agenda," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 51.
    21. Raimundo Poveda, 2000. "La reforma del sistema de provisiones de insolvencia," Boletín Económico, Banco de España, issue JAN, pages 79-91, Enero.
    22. -, 2000. "Equity, development and citizenship," Documentos de posición del período de sesiones de la Comisión 14969, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    23. Salvador Valdés-Prieto & Marcelo Soto, 1998. "The Effectiveness of Capital Controls: Theory and Evidence from Chile," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 25(2), pages 133-164, January.
    24. -, 2002. "Growth with stability: financing for development in the new international context," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2319 edited by Eclac.
    25. Leonardo Villar & Hernán Rincón, 2000. "The Colombian Economy In The Nineties: Capital Flows And Foreign Exchange Regimes," Borradores de Economia 3575, Banco de la Republica.
    26. Jason Furman & Joseph E. Stiglitz, 1998. "Economic Crises: Evidence and Insights from East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 1-136.
    27. Andrés VELASCO, 2000. "Exchange-Rate Policies For Developing Countries: What Have We Learned? What Do We Still Not Know?," G-24 Discussion Papers 5, United Nations Conference on Trade and Development.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ocampo, José Antonio, 2003. "Capital-account and counter-cyclical prudential regulations in developing countries," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1796, September.
    2. Frankel, Jeffrey, 2010. "Monetary Policy in Emerging Markets," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 25, pages 1439-1520, Elsevier.
    3. José Antonio Ocampo, 2005. "A Broad View of Macroeconomic Stability," Working Papers 1, United Nations, Department of Economics and Social Affairs.
    4. Ffrench-Davis, Ricardo, 2003. "Financial crisis and national policy issues: an overview," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1785, September.
    5. -, 2002. "Growth with stability: financing for development in the new international context," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2319 edited by Eclac.
    6. Tovar, Camilo Ernesto & Ocampo, José Antonio, 2003. "La experiencia colombiana con los encajes a los flujos de capital," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    7. Jeffrey A. Frankel, 2010. "Monetary Policy in Emerging Markets: A Survey," NBER Working Papers 16125, National Bureau of Economic Research, Inc.
    8. Fouzia Amin & Sanmugam Annamalah, 2013. "An evaluation of Malaysian capital controls," Journal of Economic Studies, Emerald Group Publishing, vol. 40(4), pages 549-571, August.
    9. José Antonio Ocampo, 2000. "Recasting the International Financial Agenda," SCEPA working paper series. 2000-18, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    10. Buch, Claudia M. & Heinrich, Ralph P. & Pierdzioch, Christian, 2001. "Globalisierung der Finanzmärkte: Freier Kapitalverkehr oder Tobin-Steuer?," Kiel Discussion Papers 381, Kiel Institute for the World Economy (IfW Kiel).
    11. Arana, Rumile & Ramirez, Francisco A. & Wright, Allan, 2017. "Credit Risks and Monetary Policy within Caribbean Economies," IDB Publications (Working Papers) 8268, Inter-American Development Bank.
    12. Ricardo Ffrench-Davis, 2008. "From Financieristic To Real Macroeconomics: Seeking Development Convergence In Ees," Working Papers wp272, University of Chile, Department of Economics.
    13. Franklin Huaita & Manuel Agosín Trumper, 2007. "Why Should Emerging-Market Countries (Still) Concern Themselves With Capital Inflows?," Working Papers wp268, University of Chile, Department of Economics.
    14. Abhijit Sen Gupta, 2010. "Management of International Capital Flows: The Indian Experience," Competence Centre on Money, Trade, Finance and Development 1003, Hochschule fuer Technik und Wirtschaft, Berlin.
    15. Piersanti, Giovanni, 2012. "The Macroeconomic Theory of Exchange Rate Crises," OUP Catalogue, Oxford University Press, number 9780199653126, Decembrie.
    16. Concha, Alvaro & Galindo, Arturo José & Vasquez, Diego, 2011. "An assessment of another decade of capital controls in Colombia: 1998–2008," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(4), pages 319-338.
    17. K.S. Jomo & Ilene Grabel & Gerald Epstein, 2003. "Capital Management Techniques In Developing Countries: An Assessment of Experiences From the 1990s and Lessons for the Future," Working Papers wp56, Political Economy Research Institute, University of Massachusetts at Amherst.
    18. Umezaki, So, 2006. "Monetary and Exchange Rate Policy in Malaysia before the Asian Crisis," IDE Discussion Papers 79, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Moritz Cruz & Bernard Walters, 2008. "Is the accumulation of international reserves good for development?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 665-681, September.
    20. Ocampo, José Antonio, 2001. "International asymmetries and the design of the International Financial System," Series Históricas 7776, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecr:col093:34817. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Biblioteca CEPAL (email available below). General contact details of provider: https://edirc.repec.org/data/eclaccl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.