In this paper we characterize empirically the comovements of macro variables typically observed in middle income countries, as well as the 'boom-bust cycle' that has been observed during the last two decades. We find that many countries that have liberalized their financial markets, have...

There is no agreement regarding the growth-enhancing effects of financial liberalization, mainly because it is associated with risky international bank flows, lending booms, and crises. In this paper we make the case for liberalization despite the occurrence of crises. We show that in developing...