This paper provides an analysis of Keynes's original Bancor proposal as well as more recent proposals for fixed exchange rates. We argue that these schemes fail to pay due attention to the importance of capital movements in today's economy, and that they implicitly adopt an unsatisfactory notion...

Financial assistance provided by the International Monetary Fund (IMF) is supposed to unlock other financing, acting as a catalyst for private capital flows. The empirical evidence of the presence of such a catalytic effect has, however, been mixed. This paper shows that a possible explanation...

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 offers a possible theoretical rationale - currently lacking - for the proposition that intermediate exchange rate regimes are no longer viable. According to this proposition, countries are being pushed to the ldquo;corners,rdquo; the extremes of either free floating or firm fixing. We...

Hikes in U.S. interest rates in 1999-2000 have started to spill over to other economies' interest rates, which in many countries have risen to reflect the higher U.S. rates. Are countries with flexible exchange rates better able to isolate their domestic interest rates from this type of negative...

Credibility and transparency are at the core of the current debate on exchange rate regimes. Among the reasons why intermediate regimes have fallen out of favor, a possibly important one is that they are not transparent: it is difficult to verify them. This paper investigates how difficult it is...

Using a large sample of developing and industrialized economies during 1970-1999, this paper explores whether the choice of exchange rate regime affects the sensitivity of local interest rates to international interest rates. In most cases, we cannot reject full transmission of international...

This paper offers a possible theoretical rationale ? currently lacking -- for the proposition that intermediate exchange rate regimes are no longer viable. According to this proposition, countries are being pushed to the "corners," the extremes of either free floating or firm fixing. We...

Currency and financial turmoils in international capital markets have been the focus of an extensive theoretical research which started around 30 years ago. This paper provides a synthetic overview of this theoretical modeling. We analyze the basic analytical framework corresponding to the...

Financial stability is an important policy objective, since crises are associated with large economic, social and political costs. Promoting stability requires preventing 'sudden stops' in capital flows, which are events in which foreign financing abruptly disappears. This paper contributes to...