How to manage capital inflows remains an important policy issue for many emerging market economies. This paper presents a brief survey of the literature on managing capital inflows, with a focus on developing and emerging market economies. The paper, after discussing the economic characteristics...

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...

The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital...

In this chapter, we use a benchmark limited-commitment model to explore key issues in the economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign debt as well as reviewing a number of empirical facts, we use the model to discuss debt overhang, risk-sharing,...

We analyse the effect of the uncertainty about the fundamentals on the probability of sudden stops of capital flows from a theoretical and empirical perspective. Our model predicts that the probability of crises increases with the uncertainty, ie. the dispersion of private signals about the true...

In this paper we develop a two country general equilibrium extension of the Stockman (1980)-Lucas (1982) equilibrium exchange rate model. This optimising framework gives us the opportunity to analyse the effect of foreign direct investment on trade and welfare of both the investor and the...

This paper examines empirically the role of macroprudential policy in addressing the effects of external shocks on financial stability. In a sample of 62 economies over the period of 2000: Q1-2016: Q4, our dynamic panel regressions show that an appreciation of the local exchange rate is...

Previous research on the intertemporal approach is based on the standard, real model of the balance of trade. This paper outlines a more general model that allows for monetary non-neutrality, and tests the general model against a restricted version that embodies neutrality. While the empirical...

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...