- Figures (and map)
- Shifting Paradigms in Latin America's Economic Development
- Institutions and the Historical Roots of Latin American Divergence
- Political Institutions, Policymaking, and Economic Policy in Latin America
- The Washington Consensus: Assessing A “damaged Brand”
- From Old to New Developmentalism in Latin America
- Environmental Sustainability
- Taming Capital Account Shocks: Managing Booms and Busts
- Exchange Rate Regimes in Latin America
- Monetary Policy in Latin America: Performance Under Crisis and the Challenges of Exuberance
- Domestic Financial Development in Latin America
- Fiscal Policy in Latin America
- Fiscal Legitimacy, Inequalities, and Democratic Consolidation in Latin America
- Latin America in the World Trade System
- Regional Integration
- The Effects of Trade Liberalization on Growth, Employment, and Wages
- The Recent Commodity Price Boom and Latin American Growth: More than New Bottles for an Old Wine?
- Curse or Blessing? Natural Resources and Human Development
- Foreign Direct Investment in Latin America
- China and the Future of Latin American Economic Development
- Latin America in the Recent Wave of International Migration
- Structural Transformation and Economic Growth in Latin America
- Learning, Technological Capabilities, and Structural Dynamics
- Why Has Productivity Growth Stagnated in Most Latin American Countries Since the Neo-Liberal Reforms?
- Agricultural and Rural Development
- An Energy Panorama of Latin America
- Infrastructure in Latin America
- The Rise and Fall of Income Inequality in Latin America
- Multidimensional Poverty in Latin America: Concept, Measurement, and Policy
- Economic Insecurity and Development in Latin America and the Caribbean
- Employment: The Dominance of the Informal Economy
- Latin American Labor Reforms: Evaluating Risk and Security
- Social Protection in Latin America: Achievements and Limitations
- Social Security Reforms in Latin America
Abstract and Keywords
This chapter notes that the liberalization of the capital accounts of Latin American economies led to sharp surges and then reversals of capital flows, which posed both severe difficulties for macroeconomic management and led to very costly crises. It points out that emerging economies, frequently led by capital surges, penetrate into vulnerability zones, which is contrary to conventional economic views which capital flows provide discipline for governments to follow better macroeconomic policies. The vulnerabilities generated include: high external liabilities, with a large short-term share; significant current account deficits; appreciated exchange rates and currency mismatches; high prices of domestic financial assets and real estate; and sizable increases in money supply as counterpart of the accumulation of international reserves.
Ricardo Ffrench-Davis, Professor of the Department of Economics at University of Chile, Santiago.
Stephany Griffith-Jones, Head of Financial Research of the Initiative for Policy Dialogue at Columbia University.
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