Financial Globalisation and Emerging Markets Volatility

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By this: publisher
In this Subject: Business ,&nbsp; Economics
By this author: Leijonhufvud, Christina

Author: Leijonhufvud, Christina

Source: The World Economy, Volume 30, Number 12, December 2007 , pp. 1817-1842(26)

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Abstract:

The volatility of capital flows to emerging market (EM) countries and frequency of financial crises have imposed high welfare costs on the countries involved. The empirical literature provides, at best, a mixed picture on the relationship between long-run EM country growth and financial integration. Meanwhile, the prevailing policy discourse regarding reform of the international financial system remains incomplete: the focus has largely been on either institutional and policy measures required of EM countries or international crisis-resolution procedures. The role played by private financial markets and institutions in the developed world has not received adequate attention. This paper describes some of the structural features inherent in today's financial markets that directly contribute to the instability in EM capital flows.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1467-9701.2007.01077.x

Publication date: 2007-12-01