Managing Financial Integration and Capital Mobility — Policy Lessons from the Past Two Decades

18 Pages Posted: 16 Aug 2013

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics; National Bureau of Economic Research (NBER)

Brian Pinto

Independent

Date Written: September 2013

Abstract

Emerging market experience over the past two decades has revealed the tenuous links between external financial integration and faster growth, and the proclivity of such integration to fuel costly crises. Emerging markets learned, converging to the middle ground of the macroeconomic trilemma. Following their crises of 1997–2001, emerging markets added financial stability as a goal, self‐insured by building up international reserves, and adopted a public finance approach to financial integration. The global crisis of 2008–09 illustrated that the advanced economies “overshot” the optimal degree of financial deregulation, while the resilience of the emerging markets validated their public finance approach to financial integration.

Suggested Citation

Aizenman, Joshua and Pinto, Brian, Managing Financial Integration and Capital Mobility — Policy Lessons from the Past Two Decades (September 2013). Review of International Economics, Vol. 21, Issue 4, pp. 636-653, 2013. Available at SSRN: https://ssrn.com/abstract=2311090 or http://dx.doi.org/10.1111/roie.12061

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Brian Pinto

Independent ( email )

No Address Available

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