Kicking the Habit: Moving from Pegged Rates to Greater Exchange Rate Flexibility

Why do governments find it so difficult to move from pegged exchange rates to greater exchange rate flexibility? I first establish that there is a problem to be solved: that there are powerful incentives for greater flexibility deriving from changes in the international economic and financial environment but that policymakers find it difficult to engineer a smooth transition. I offer practical suggestions and a framework under which the probability of a smooth transition can be maximised. Drawing examples from recent economic history, I then attempt to understand the experience of selected countries which have undertaken this transition.     

The Euro as a Reserve Currency

This paper presents historical and econometric evidence that the euro will come to rival the dollar as a reserve currency only slowly. The fact that it pays for central banks to hold their foreign reserves in a currency that is widely used in international transactions creates a network externality that gives the dollar an incumbency advantage. In addition, creating a market with sufficient stability to be attractive to international investors requires continuous liquidity management and periodic lender-of-last-resort operations by the issuing central bank. That the Maastricht Treaty assumes a strong separation between monetary policy and prudential regulation consequently bodes ill for the euro's prospects as a reserve currency.J. Japan. Int. Econ., Dec. 1998,12(4), pp. 483–506. Department of Economics and Department of Political Science, University of California, Berkeley, California 94720.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Number F3.     

Capital Account Liberalization: What Do Cross-Country Studies Tell Us?

Capital account liberalization, it is fair to say, remains oneof the most controversial and least understood policies of ourday. One reason is that different theoretical perspectives havevery different implications for the desirability of liberalizingcapital flows. Another is that empirical analysis has failedto yield conclusive results.     

European Monetary Unification: Implications of Research for Policy,Implications of Policy for Research

Open Economies Review -     

FINANCING INFRASTRUCTURE IN DEVELOPING COUNTRIES: LESSONS FROM THE RAILWAY AGE

In recent years suggestions for reforming the provision andfinancing of infrastructure services in developing countrieshave focused on private participation. This alternative to publicfinancing is seen as a way both to minimize the inefficienciesof public administration and to avoid the need for externalborrowing. In fact, for much of the nineteenth century, infrastructureprojects were privately financed and built. This approach, however,did not obviate the need for government intervention and foreigncapital. Because of the difficulties of assessing projects,investors were reluctant to commit their funds, and governmentsturned to subsidies and loan guarantees to encourage investment.Often, however, government intervention only replaced one setof problems with another. Investors with government-guaranteedloans had no incentive to monitor the firm's performance—alimitation that led to the diversion of funds and frustratedthe public interest. This article draws out the implicationsof this experience for policymakers in developing countriestoday.      

金融危机对新兴市场的影响及其启示

本次金融危机不仅对发达国家影响重大,也对新兴市场等国家,以及未来世界经济和管理秩序造成重要影响。作者较系统和全面地分析了本次金融危机给新兴市场造成的影响,包括贸易政策、财政贷币和汇率政策、国际金融结构等方面。主要结论认为新兴市场对国外投资资金来源多样化的依赖会下降,银行全球化经营的限制会加强,银行经营领域与监管范围将更趋一致。但是,本次金融危机对全球化的其他领域,包括生产、贸易等方面的影响有限,对国际货币体系结构的影响亦有限。     

The Euro Crisis in the Mirror of the EMS: How Tying Odysseus to the Mast Avoided the Sirens but Led Him to Charybdis

Open Economies Review - Why was recovery from the euro area crisis delayed for a decade? The explanation lies in the absence of credible and timely policies to backstop financial intermediaries and...