Although the sovereign debt crisis is worldwide considered as a main disorder affecting indebted countries' economic recovery, its analysis is still incomplete and has so far failed to provide a satisfactory explanation of its origin and of the way it can be successfully addressed. The aim of...

This paper explores the economic rationale of an EMU fiscal capacity. It explains that the EMU's architecture suffers from two structural weaknesses: a tendency to develop imbalances and an inherent deflationary bias. The analysis shows that the external imbalances developed during the first...

There is a perception that IMF programmes are not catalytic and instead associated with large capital outflows, higher refinancing costs for sovereigns and adverse movements in stock markets. This has led to concerns that an expectation of adverse effects of IMF programmes may deter countries...

We investigate the role of global factors in driving cross-border capital flows. We formulate a model of gross capital flows through the banking sector and derive a closed form solution that highlights the leverage cycle of global banks and its interaction with recipient country characteristics....

We investigate global factors associated with bank capital flows. We formulate a model of the international banking system where global banks interact with local banks. The solution highlights the bank leverage cycle as the determinant of the transmission of financial conditions across borders...

When does the combination of flexible exchange rates and domestic inflation-oriented monetary policy guarantee insulation from global financial conditions? We examine a dynamic global game model of international portfolio flows where, for some combination of parameters, the unique equilibrium...

This paper presents a model to explain how IMF programmes can catalyse private capital flows following a financial crisis, a concept that was at the heart of the IMF's strategy for dealing with capital account crises in the late 1990s. In the model, the IMF lends funds below the prevailing...

Recent discussions at the IMF and the G-20 on strengthening the international monetary system have emphasized, among other efforts, increasing the financial depth of emerging markets. Such deepening is widely believed to confer important stability benefits, helping countries limit swings in...

A modern incarnation of the trilemma is essential for understanding the evolving global financial architecture, and for coming up with ways to mitigate financial fragility. The scarcity of policy instruments relative to the policy goals implies complex country-specific tradeoffs between the...

This paper makes contributions to the study of bilateral swap lines (BSLs). First, this paper fills a BSL information gap by constructing a comprehensive database of BSLs based on publicly available information, including after the onset of the COVID-19 pandemic. Second, the paper provides the...