There is growing discontent with the conventional wisdom concerning economic policy. The unhappy fact seems to be that a stable macroeconomic environment may be necessary but not sufficient to coax the desired outcomes from liberalized financial systems. This paper reviews several promising...

The apparent success of several East Asian countries in sterilizing capital inflows stands in apparent contradiction to the finding of high capital mobility. This paper argues that previous studies examining money market rates may be misplacing their focus, since most lending is mediated through...

Required reserves on banks' deposit liabilities have been utilized by both industrial and developing countries to discourage and sterilize international capital flows. In this paper we utilize an open economy macro model incorporating bank credit to evaluate this policy. The model suggests that...