We identify the major public debt overhang episodes in the advanced economies since the early 1800s, characterized by public debt to GDP levels exceeding 90% for at least five years. Consistent with Reinhart and Rogoff (2010) and other more recent research, we find that public debt overhang...

Exchange rate-based stabilization programs in chronic-inflation countries have often been accompanied by an initial expansion of private consumption followed by a contraction. This consumption cycle has been attributed to lack of credibility, in the sense that the public views the reduction in...

Based on a sample of 104 countries, we document four key stylized facts regarding the interaction between capital flows, fiscal policy, and monetary policy. First, net capital inflows are procyclical (i.e., external borrowing increases in good times and falls in bad times) in most OECD and...

In this paper, we examine which markets are most synchronized internationally and exhibit the greater extent of comovement. We focus on daily data for four asset markets: bonds, equities, foreign exchange, and domestic money market. Our sample covers thirty-five developed and emerging market...

This paper highlights the findings of some of the recent research on capital flows, credit booms, and their attendant consequences for asset prices, business cycles, financial crises and the interaction among these. The aim is to condense key results from the relevant literature and promote...

The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures...

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.

Motivated by the severe Asian crisis of 1997, Giancarlo Corsetti, Paolo Pesenti, and Nouriel Roubini make a fine contribution to the growing literature that analyzes the symptoms of a country's vulnerability to currency crises. While the sample of countries covered in the empirical analysis...

In the wake of the Mexican and Asian currency turmoil, the subject of financial crises has come to the forefront of academic and policy discussions. This paper analyzes the links between banking and currency crises. We find that: problems in the banking sector typically precede a currency...

Three of the papers in this volume address various aspects of these issues—in particular as regards the behavior and impact of sovereign credit ratings and the development of a portfolio model that lends itself to testing the vulnerability of banks. Two of the papers address issues related to...