Devaluation is an integral part of adjustment in many developing countries, particularly relied upon by countries facing large external imbalances. A devaluation can only reduce trade imbalances if it translates to a real devaluation and if trade flows respond to relative prices in a sig...

In addition to altering fiscal, monetary, and exchange rate policies in response to the surge in international capital inflows in the early 1990s,policy makers in many countries in ASIa, Eastern Europe, and Latin America have resorted to measures to control capital inflows.We provide a...

The case studies collected in this volume provide insights into that and other related policy questions by examining what drives saving in Latin America. The studies cover Argentina, Chile, Colombia, Mexico, Peru, Uruguay, and Venezuela and span a variety of topics ranging from assessing the...

This paper examines the relationship between temporary terms of trade shocks and household saving in developing countries. It is first shown that, from a theoretical standpoint, this relationship is ambiguous: private saving may rise or fall in response to a transitory terms of trade shock,...

The U.S recession of 2007 to 2009 is unique in the post-World-War-II experience by the broad company it kept. Activity contracted around the world, with the advanced countries of the North experiencing declines in spending normally the purview of the developing economies of the South. The last...

Periods of high indebtedness have historically been associated with a rising incidence of default or restructuring of public and private debts. Sometimes the debt restructuring is subtle and takes the form of, “financial repression.” In the heavily regulated financial markets of the Bretton...

Capital inflows can be a mixed blessing, especially in economies with thin domestic financial markets and when driven by investors with a short-term focus. Many levers of policy can be applied to resist the effects of the inflows. One that has been widely relied upon has been currency...

In this note we summarize our recent paper, where we delved into the details of this apple-to-oranges problem with the aim of defining a minimum common ground. We begin our analysis by explicitly documenting the kinds of measures that are construed as capital controls. Along the way, we describe...

This paper highlights the findings of some of the recent research on capital flows, credit booms, and their attendant consequences for asset prices, business cycles, financial crises and the interaction among these. The aim is to condense key results from the relevant literature and promote...

We focus on four previous systemic financial crises that the United States has experienced since 1870. These include the crisis of 1873 (called the Great Depression until the 1930s), the 1893 crisis, the panic of 1907, and the Great Depression. Given that all of the earlier crises predate the...