Financial Turmoil and Choice of Exchange Rate Regime

35 Pages Posted: 21 Apr 2011

See all articles by Ricardo Hausmann

Ricardo Hausmann

Harvard University - Harvard Kennedy School (HKS)

Michael Gavin

affiliation not provided to SSRN

Carmen Pages

Inter-American Development Bank (IADB); IZA Institute of Labor Economics

Ernesto Stein

Inter-American Development Bank (IDB)

Date Written: January 1999

Abstract

Financial turmoil is becoming a fact of life in Latin America. The 1990s have been characterized by enormous volatility in the magnitude and cost of capital flows. The correlation of capital swings across disparate countries suggests that the quality of emerging market policies in addition to global factors have been the main actors in this drama. Therefore, the blame for financial turmoil has moved away from inappropriate domestic policies. Instead, the paradigm has shifted to one of determining which policies ¾ domestic or international¾ are most effective in taming the destabilizing effects of inherently volatile capital flows.

Suggested Citation

Hausmann, Ricardo and Gavin, Michael and Pages-Serra, Carmen and Stein, Ernesto Hugo, Financial Turmoil and Choice of Exchange Rate Regime (January 1999). IDB Working Paper No. 331, Available at SSRN: https://ssrn.com/abstract=1817197 or http://dx.doi.org/10.2139/ssrn.1817197

Ricardo Hausmann (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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HOME PAGE: http://www.hks.harvard.edu/about/faculty-staff-directory/ricardo-hausmann

Michael Gavin

affiliation not provided to SSRN

Carmen Pages-Serra

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States
202-623 3110 (Phone)
202-623-2481 (Fax)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Ernesto Hugo Stein

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States

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