The characteriscs of recent capital inflows to Latin America are discussed. It is argued that these inflows are partially explained by economic conditions outside the region, like the recession in the United States and lower international interest rstes. The importance of external factors...

In this paper we present evidence that capital account reversals have become more severe for emerging markets. Because policy options are limited in the midst of a capital market crisis and because so many countries have already had crises recently, we focus on some of the policies that could...

Este trabajo presenta un análisis teórico y empirico de las politicas dirigidas a alcanzar un nivel más depreciado de la tasa de carnbio real. Un modelo de optimización intertemporal sugiere que, en ausencia de cambios en la politica fiscal, un nivel más depreciado de la tasa de carnbio...

During the past few years, many emerging market countries have suffered severe currency and banking crises. A popular view blames fixed exchange rates--specifically, soft pegs--for these financial meltdowns. Indeed, fixed exchange rates have been so demonized by some adherents to that view that...

More frequent and increasingly severe crises are encouraging emerging market economies to seek means to make themselves less vulnerable to sudden stops in capital flows. Capital controls have been widely discussed, but dollarization may offer a longer-term and more market-friendly solution.

In this short note we further discuss the role of macroeconomic policies to deal with surges in capital inflows. Primarily policies aimed at avoiding financial crises or an overvaluation of the real exchange rate.

Since 1990 capital has flowed from industrial countries to developing regions like Latin America, and parts of Asia. Reentry into international capital markets is a welcome turn of events for most countries. However, capital inflows are often associated with inflationary pressures, a real...

This paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate. An intertemporal optimizing model suggests that, in the absence of changes in fiscal policy, a more depreciated level of the real exchange can only be...

This paper discusses the economic performance of Latin America in the last decade, paying special attention to growth and the financial sector. In particular, it shows that external factors, such as like U.S. interest rates and the business cycle, play a key role in capital inflows, investment,...

Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents to that view suggest that countries move to corner solutions--hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to...