The author provides a selective review of the recent analytical and empirical literature on the benefits and costs of international financial integration. He discusses the impact of financial openness on consumption, investment, and growth, and the impact of foreign bank entry on the domestic...

The author argues that externalities in financial markets, implicit and explicit guarantees on financial transactions, and information asymmetries in financial markets that may exacerbate contagion provide a rationale for a government role in managing the risk associated with cross-border...

The debate about the relationship between democratic forms of government and the free movement of capital across borders dates to the 18th century. It has regained prominence as capital on a massive scale has become increasingly mobile and as free economies experience continuous pressure from...

Most people agree that the soundness of macroeconomic policies should be judged by their efficacy in meeting the objectives of steady growth, full employment, stable prices, and a viable external payments situation. What people debate about are the links between macroeconomics and economic...

The authors present a simulation model (applied here to Uruguay and implemented in Javelin) that permits analysis of the interaction between a financial system and the economic environment in which it operates. The model allows the user to compute and project the indicators necessary to monitor...

The impact of permanent real depreciation on a country's capital stock is uncertain. Whether total capital stock rises or falls depends on how depreciation affects aggregate demand, the real interest rate, and especially the import content of capital goods. In the long run, the capital stock can...

The increase in trade, the increasing internationalization of production and the improvements in communications, together with the legalization of foreign currency instruments in a growing number of countries, have led to a de facto liberalization of the capital account. In line with the greater...

In considering how the euro will affect Sub-Saharan Africa, the authors examine the transmission channels through which the euro could affect economies in the region. They examine the risks and opportunities the euro presents for Sub-Saharan African countries. They especially examine the effects...

Mexico's economic crisis in December 1994 gave renewed importance to the issue of"spillover"or"contagion"effects in other emerging market economies (and their sensitivity to events in larger countries in the region.) They focus on how small open economies are affected by their neighbors'ecomomic...

The development of government bond markets and, in particular, their currency composition have recently received much interest, partly because of their relation with financial crises. The authors study the determinants of the size and currency composition of government bond markets for a panel...