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A counter-cyclical framework for a development-friendly international financial architecture

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Listed:
  • José Antonio Ocampo
  • Stephany Griffith-Jones

Abstract

The 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.

Suggested Citation

  • José Antonio Ocampo & Stephany Griffith-Jones, 2007. "A counter-cyclical framework for a development-friendly international financial architecture," Working Papers 39, United Nations, Department of Economics and Social Affairs.
  • Handle: RePEc:une:wpaper:39
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    File URL: http://www.un.org/esa/desa/papers/2007/wp39_2007.pdf
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    References listed on IDEAS

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    1. Hausmann, Ricardo & Panizza, Ugo, 2003. "On the determinants of Original Sin: an empirical investigation," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 957-990, December.
    2. Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Végh, 2005. "When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Chapters,in: NBER Macroeconomics Annual 2004, Volume 19, pages 11-82 National Bureau of Economic Research, Inc.
    3. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    4. Serge Jeanneau & Camilo E Tovar, 2006. "Domestic bond markets in Latin America: achievements and challenges," BIS Quarterly Review, Bank for International Settlements, June.
    5. Stiglitz, Joseph E., 2003. "Whither reform? Towards a new agenda for Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    6. repec:idb:idbbks:347 is not listed on IDEAS
    7. Barry Eichengreen, 2010. "Global Imbalances and the Lessons of Bretton Woods," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262514141, January.
    8. José Antonio Ocampo, 2005. "A Broad View of Macroeconomic Stability," Working Papers 1, United Nations, Department of Economics and Social Affairs.
    9. Rob Vos & Roberto Frenkel & José Antonio Ocampo & José Gabriel Palma & Manuel Marfán & Jaime Ros & Lance Taylor & Nelson Correa & Mario Cimoli, 2005. "Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability," IDB Publications (Books), Inter-American Development Bank, number 59518 edited by José Antonio Ocampo, February.
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    Citations

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    Cited by:

    1. Von Arnim, Rudi & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2015. "Commodity dependence and price volatility in least developed countries: A structuralist computable general equilibrium model with applications to Burkina Faso, Ethiopia and Mozambique," Working Papers 52, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    2. José Ocampo, 2007. "The Instability and Inequities of the Global Reserve System," International Journal of Political Economy, Taylor & Francis Journals, vol. 36(4), pages 71-96.

    More about this item

    Keywords

    volatility; contagion; financial crises; counter-cyclical macroeconomic policies; counter­cyclical prudential regulation; GDP-indexed and local currency bonds; regional macroeconomic cooperation.;

    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

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