I. Background. 1 Introduction -- 2 A century of capital flows -- II. Capital account liberalization. 3 Capital account liberalization : what do the cross-country studies tell us? -- 4 When does capital account liberalization help more than it hurts? with Carlos Arteta and Charles Wyplosz -- III....

This paper reviews the controversy over Europe's Stability and Growth Pact and offers a proposal for its reform. It argues that Europe would be best served by focusing on the fundamental causes of unsustainable debts - public enterprises that are too big to fail, unfunded public pension schemes...