Capital Mobility in Developing Countries: Some Measurement Issues and Empirical Estimates

A fundamental determinant of the macroeconomic properties ofan economy is its degree of financial integration with the outsideworld. Yet very little is known about this characteristic ofmany developing economies. An important stumbling block in theempirical assessment of financial integration is the multiplicityof approaches to measurement. This article describes and evaluatesalternative tests of capital mobility and applies four suchtests to assess the degree of integration with external financialmarkets exhibited by a large group of developing countries inrecent years. The evidence suggests that a substantial numberof developing countries can be considered financially open.     

Transmisión de precios futuros de maíz del Chicago Board of Trade al mercado spot mexicano

In Mexico, the use of currency hedging program from the Agency Services for Marketing and Agricultural Market Development (ASERCA) is an instrument that has been used by producers of corn (mostly white), for the acquisition of derivatives in the Chicago Board of Trade (CBOT), whose underlying is yellow corn quality US#2. In an environment of high volatility in corn prices, CBOT prices should be adjusted with domestic spot prices to encourage Mexican producers to participate in the program, but through an analysis of multivariate stochastic volatility during the period 2007 to 2012, it showed that the market price of corn futures is not closely related to those recorded prices in some country states, so we can infer that the coverage by ASERCA program does not adequately serves the purpose of protecting domestic farmers growing white corn, although their use has increased.     

Transmission of future prices of corn of the Chicago Board of Trade to the Mexican spot market

In Mexico, the use of the coverage program of the Bureau of Market Services and Agricultural Market Development (ASERCA for its acronym in Spanish) is a tool that has been used by corn producers (mainly for white corn) for the acquisition of derived products in the CBOT (Chicago Board of Trade), the underlying element of which is US#2 grade yellow corn. In a high volatility environment regarding the prices of corn, the prices of CBOT should be adjusted with the spot domestic prices to incentivize Mexican producers to participate in the program. However, through a multivariate stochastic volatility analysis during the period of 2007–2012, it was shown that the future price of corn is not strongly related to the prices registered in some states of the country, therefore, it can be inferred that the coverage through the ASERCA program does not properly comply with its objective of protecting the national farmers that grow white corn, despite the fact that its use has increased.     

The Simple Analytics of Sudden Stops

Currency crises in emerging and developing countries have often been characterized by “sudden stops” of capital flows. A variety of mechanisms have been adduced to explain the emergence of this phenomenon. This paper integrates these mechanisms into a simple and transparent analytical model in which currency mismatches, large current account deficits, and large stocks of short-term debt interact with low reserve stocks to generate dual equilibria. In this context, the “panic” equilibrium is characterized by a currency crisis, a sudden stop, and an output collapse. The potential for various policies to avoid this outcome is explored, as are the implications of the analysis for reserve accumulation.     

The Surge in Capital Inflows to Developing Countries: An Analytical Overview

After being excluded from world capital markets during the debtcrisis, many developing countries have experienced large capitalinflows during the past five years. The challenges that theseinflows pose for domestic policy in recipient countries havegenerated a substantial literature. This article presents anoverview of that literature, describing the characteristicsof the new inflows, analyzing the policy issues they raise,assessing their causes and likely sustainability, and evaluatingpotential policy responses. The desirable policy response istied to characteristics of the flows themselves as well as tothe characteristics of the recipient economy.     

Using private management standard certification to reduce information asymmetries in corrupt environments

This paper investigates how corruption in the institutional environment influences firms' decisions to obtain third‐party certification to private management standards as signals of desirable conduct. We argue that policy‐specific corruption erodes trust in government efforts to regulate firms' conduct, thus increasing the signaling value of private certifications and the likelihood of certification. However, widespread corruption in the general environment can extend distrust to private certification systems, which reduces the credibility and signaling value of private certifications, thus decreasing the likelihood that firms obtain certification. Our empirical results based on ISO 14001 environmental management system certification among 433 automotive plants in Mexico confirm these relationships. We discuss the implications of our findings for transaction cost economics, institutional theory, research, and practice. Copyright © 2012 John Wiley & Sons, Ltd.     

Greening the Supply Chain: When Is Customer Pressure Effective?

Suppliers face increasing pressure from their customers to improve their environmental performance. When firms downstream in the supply chain seek to achieve such improvements themselves, they frequently request that their suppliers adopt greener practices. This paper investigates the rationale for suppliers to comply with or resist the mandate of their customers to adopt the international environmental management standard ISO 14001 in the North American automotive industry. We argue that the effectiveness of such a mandate will vary according to the characteristics of the relationship between suppliers and customers. We contrast and test hypotheses based on both transaction cost and information theories to suggest that suppliers, whether in a dependent or distant relationship with their customers, have incentives to comply with the requests of their customers but through different mechanisms. Our study analyzed the characteristics of 3,152 automotive suppliers located in the United States, Canada, and Mexico over the 2000–2003 period. Findings indicate that suppliers with highly specialized assets, as well as younger suppliers, suppliers headquartered in Japan, and those reporting to the Toxic Release Inventory, are more likely to respond to their customers' pressures to adopt the certified management standard ISO 14001.     

Macroeconomic Stability in Developing Countries: How Much Is Enough?

Over the 1990s macroeconomic policies improved in most developingcountries, but the growth dividend from this improvement fellshort of expectations, and a policy agenda focused on stabilityturned out to be associated with a multiplicity of financialcrises. This article examines the contents and implementationof the macroeconomic reform agenda of the 1990s. It reviewsthe progress achieved through fiscal, monetary, and exchangerate policies across the developing world and the effectivenessof the changing policy framework in promoting stability andgrowth. The main lesson is that more often than not slow growthand frequent crises resulted from shortcomings in the reformagenda of the 1990s. These concern limitations in the depthand scope of the reform agenda, its lack of attention to macroeconomicvulnerabilities, and its inadequate attention to complementaryreforms outside the macroeconomic sphere.      

Monetary Policy Analysis in a Small Open Credit-Based Economy

This paper describes a simple framework for monetary policy analysis in a small open economy where bank credit is the only source of external finance. At the heart of the model is the link between banks’ lending rates (which incorporate a premium over and above the marginal cost of borrowing) and firms’ net worth. In contrast to models in the Stiglitz-Weiss or Kiyotaki-Moore tradition, the supply of bank loans is perfectly elastic at the prevailing rate. The central bank sets the refinance rate and provides unlimited access to liquidity at that rate. The model is used to study the effects of changes in official interest rates, under both fixed and flexible exchange rates. Various extensions are also discussed, including income effects, the cost channel, the role of land as collateral, and dollarization.