The connection to global capital markets can make it more difficult for an individual emerging market economy to assess conditions and formulate and implement macroeconomic policies. This paper examines a number of policy problems in a nontechnical way. First, in assesssing the potential for...

This paper describe how Capital Flows will influence the EU Accession Countries of Central and Eastern Europe. In particular it shows how carry trade flows are likely to exacerbate the difficulty of stabilization policy, how equilibria are critically contingent on risk premia, and, therefore,...

This paper is about real convergence, capital flows, and monetary policy in the European transition countries. It shows how differences in factor endowments coupled with Balassa-Samuelson real exchange rate effects will motivate capital flows, exacerbate the complexity of monetary policy...