The recent East Asian crisis has highlighted the relationship between financial development and output volatility. In … volatility only occurs at intermediate levels of financial development; second, that whilst full financial liberalization …, including an unrestricted opening to foreign lending, can destabilize an emerging market economy, in contrast output volatility …

This paper offers empirical evidence that real exchange rate volatility can have a signi.cant impact on the long …-term rate of productivity growth, but the effect depends critically on a country's level of financial development. For countries … with relatively low levels of financial development, exchange rate volatility generally reduces growth, whereas for …