We suggest that foreign banks may represent a trade-off for their developing country hosts. A portfolio model is developed to show that a more diversified international bank may be one of lower, overall risk and less susceptible to funding shocks but may react more to shocks that affect expected...

After decades of trial, error, and occasional regress, the pieces of a successful Latin American economic model can be seen scattered among the leading economies of the region. The most traditional macroeconomic maladies of the emerging world, such as chronic fiscal imbalances and monetary...

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...

Latin America is volatile--about two to three times as volatile as the industrial economies. It is more volatile than any region other than Africa and the Middle East. Latin America`s access to international financial markets is sporadic, and often disappears just when it would be most valuable

This paper examines how the combination of indebtedness and exogenous shocks induce volatility for the countries of Latin America. A techique for simulating the impact of shocks on the costs of external indebtedness and the response of fiscal policies in adjustment to such shocks is presented...

This paper considers whether reserve requirements have been effective in controlling excessive liquidity growth. It also discusses the adequacy of bank supervisory standards, such as capital to risk-weighted asset standards, in controlling expansion of risky bank credit that often accompanies...

Have the economies of Latin America become less volatile as a result of the economic stabilization and structural reforms implemented during the past decade? The answer is a qualified “yes. ” The reforms have helped, but more needs to be done to ensure the macroeconomic stability required...