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Financial Turmoil and the Choice of Exchange Rate Regime

Author

Listed:
  • Hausmann, Ricardo
  • Gavin, Michael
  • Pagés, Carmen
  • Stein, Ernesto H.

Abstract

Financial turmoil is becoming a fact of life in Latin America. The 1990s have been characterized by enormous volatility in the magnitude and cost of capital flows. The correlation of capital swings across disparate countries suggests that the quality of emerging market policies in addition to global factors have been the main actors in this drama. Therefore, the blame for financial turmoil has moved away from inappropriate domestic policies. Instead, the paradigm has shifted to one of determining which policies - domestic or international - are most effective in taming the destabilizing effects of inherently volatile capital flows.

Suggested Citation

  • Hausmann, Ricardo & Gavin, Michael & Pagés, Carmen & Stein, Ernesto H., 2010. "Financial Turmoil and the Choice of Exchange Rate Regime," IDB Publications (Working Papers) 1108, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:1108
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    References listed on IDEAS

    as
    1. Michael Gavin & Ricardo Hausmann, 1999. "Preventing Crisis and Contagion: Fiscal and Financial Dimensions," Research Department Publications 4172, Inter-American Development Bank, Research Department.
    2. Barry Eichengreen, 1998. "Exchange Rate Stability and Financial Stability," Open Economies Review, Springer, vol. 9(1), pages 569-608, January.
    3. Cheng, Youngrok, 1998. "Analysis of the Chinese Exchange Rate Stability," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 2(1), pages 123-155, March.
    4. Chang, Roberto & Velasco, Andres, 2000. "Financial Fragility and the Exchange Rate Regime," Journal of Economic Theory, Elsevier, vol. 92(1), pages 1-34, May.
    5. repec:idb:wpaper:401 is not listed on IDEAS
    6. Maurice Obstfeld & Kenneth Rogoff, 1995. "The Mirage of Fixed Exchange Rates," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 73-96, Fall.
    7. Michael Gavin & Ricardo Hausmann, 1999. "Prevención de crisis y el contagio: aspectos fiscales y financieros," Research Department Publications 4173, Inter-American Development Bank, Research Department.
    8. repec:imf:imfops:78 is not listed on IDEAS
    9. Michael Gavin & Ricardo Hausmann, 1999. "Preventing Crisis and Contagion: Fiscal and Financial Dimensions," Research Department Publications 4172, Inter-American Development Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

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