The paper argues that Emerging Market economies (EMs) face financial vulnerabilities that weaken the effectiveness of a domestic Lender of Last Resort (LOLR). As a result, monetary policy is inextricably linked to the state of the credit market. In particular, the central bank should be ready to...

In this post-modern world of high capital mobility, countries are being disciplined by the anonymous capital market. One view of the situation - perhaps the prevalent view among economists - is that Wall Street gets into your hair because you are running an unsustainable economic program and...