Yung Chul Park
- Published in print:
- 2005
- Published Online:
- February 2006
- ISBN:
- 9780199276776
- eISBN:
- 9780191603051
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199276773.003.0004
- Subject:
- Economics and Finance, South and East Asia
East Asian countries were showing many structural strains and rigidities prior to the crisis, partly due to cosmetic reform efforts. Four critical failures are identified: benign neglect of the ...
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East Asian countries were showing many structural strains and rigidities prior to the crisis, partly due to cosmetic reform efforts. Four critical failures are identified: benign neglect of the conflicts between government mechanism and the democratic polity and market liberalization, the inability to restructure the financial system, the closed and non-transparent corporate sector, and focus on an export-led development strategy.Less
East Asian countries were showing many structural strains and rigidities prior to the crisis, partly due to cosmetic reform efforts. Four critical failures are identified: benign neglect of the conflicts between government mechanism and the democratic polity and market liberalization, the inability to restructure the financial system, the closed and non-transparent corporate sector, and focus on an export-led development strategy.
Phillippe Aghion and Abhijit Banerjee
- Published in print:
- 2005
- Published Online:
- January 2007
- ISBN:
- 9780199248612
- eISBN:
- 9780191714719
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199248612.003.0005
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter shows how volatility can emerge endogenously, in a world where credit constraints sometimes bind. An elementary theoretical framework is developed, which generates endogenous and ...
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This chapter shows how volatility can emerge endogenously, in a world where credit constraints sometimes bind. An elementary theoretical framework is developed, which generates endogenous and persistent volatility in a growing economy with credit constraints. The basic mechanisms are the interaction of credit constraints and endogenous changes in market prices. It is argued that the model can account for a number of observed facts about lending booms and crises in emerging market economies. It also provides additional arguments in favour of countercyclical budgetary policies in less financially developed economies.Less
This chapter shows how volatility can emerge endogenously, in a world where credit constraints sometimes bind. An elementary theoretical framework is developed, which generates endogenous and persistent volatility in a growing economy with credit constraints. The basic mechanisms are the interaction of credit constraints and endogenous changes in market prices. It is argued that the model can account for a number of observed facts about lending booms and crises in emerging market economies. It also provides additional arguments in favour of countercyclical budgetary policies in less financially developed economies.
Guillermo D'Andrea
- Published in print:
- 2007
- Published Online:
- January 2008
- ISBN:
- 9780199233755
- eISBN:
- 9780191715549
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199233755.003.0015
- Subject:
- Business and Management, International Business
This chapter reviews the strategies of Latin American companies that have attained leading positions in the region, facing and beating major global companies in their product categories. The ...
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This chapter reviews the strategies of Latin American companies that have attained leading positions in the region, facing and beating major global companies in their product categories. The companies studied include Cemex, Corona Beer, Arcor, Jabon La Corona, Nazca Cosmetics, Bodegas Lopez, and others. The chapter examines the complex context drawn by scarcity in the region, and several ‘myths’ about the poor that blur managers' perspective when assessing the real market potential. Consumer research conducted in six major markets proves them wrong. The paradoxes that prevent managers from developing innovative strategies that have given the examined companies access to broad mass markets in the region are considered.Less
This chapter reviews the strategies of Latin American companies that have attained leading positions in the region, facing and beating major global companies in their product categories. The companies studied include Cemex, Corona Beer, Arcor, Jabon La Corona, Nazca Cosmetics, Bodegas Lopez, and others. The chapter examines the complex context drawn by scarcity in the region, and several ‘myths’ about the poor that blur managers' perspective when assessing the real market potential. Consumer research conducted in six major markets proves them wrong. The paradoxes that prevent managers from developing innovative strategies that have given the examined companies access to broad mass markets in the region are considered.
RUMU SARKAR
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780195398281
- eISBN:
- 9780199866366
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195398281.003.007
- Subject:
- Law, Human Rights and Immigration, Public International Law
This chapter examines emerging capital economies from the perspective of creating the new success stories in the developing world. It focuses on the underlying (legal) causes for such successes and ...
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This chapter examines emerging capital economies from the perspective of creating the new success stories in the developing world. It focuses on the underlying (legal) causes for such successes and the impediments thereto. The perspective of international finance (e.g., foreign direct and foreign portfolio investment), and their relative pitfalls are examined along with a sea change in investment patterns as may be discerned from sovereign wealth funds, and other related issues. Financing private infrastructure projects, the access to private bond and equity markets, and the dangers of global financial contagion are all explored. Finally, the need for the prudential and legal regulation of private equity markets, and related issues, are examined in the context of furthering development objectives.Less
This chapter examines emerging capital economies from the perspective of creating the new success stories in the developing world. It focuses on the underlying (legal) causes for such successes and the impediments thereto. The perspective of international finance (e.g., foreign direct and foreign portfolio investment), and their relative pitfalls are examined along with a sea change in investment patterns as may be discerned from sovereign wealth funds, and other related issues. Financing private infrastructure projects, the access to private bond and equity markets, and the dangers of global financial contagion are all explored. Finally, the need for the prudential and legal regulation of private equity markets, and related issues, are examined in the context of furthering development objectives.
John Child, David Faulkner, and Stephen B. Tallman
- Published in print:
- 2005
- Published Online:
- October 2011
- ISBN:
- 9780199266241
- eISBN:
- 9780191699139
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199266241.003.0016
- Subject:
- Business and Management, Strategy, Organization Studies
Taking an economic perspective, the developing countries that will potentially bring about the most significant impacts are those whose economies may be perceived to be ‘emerging’ in the context of ...
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Taking an economic perspective, the developing countries that will potentially bring about the most significant impacts are those whose economies may be perceived to be ‘emerging’ in the context of growing market opportunities and those that are undergoing a shift from the constraints imposed by state administration and the restrictions set in foreign trade. Foreign governments and companies may thus be able to assist economies in achieving rapid modernization. This chapter looks into how emerging economies serve as hosts for FDI and how various cooperative forms become manifest in emerging economies. It looks particularly into the environments presented in China, India, South America, and Eastern and Central Europe. It also attempts to examine the level of alliances formed with partners from local emerging economies through identifying areas of likely compatibility.Less
Taking an economic perspective, the developing countries that will potentially bring about the most significant impacts are those whose economies may be perceived to be ‘emerging’ in the context of growing market opportunities and those that are undergoing a shift from the constraints imposed by state administration and the restrictions set in foreign trade. Foreign governments and companies may thus be able to assist economies in achieving rapid modernization. This chapter looks into how emerging economies serve as hosts for FDI and how various cooperative forms become manifest in emerging economies. It looks particularly into the environments presented in China, India, South America, and Eastern and Central Europe. It also attempts to examine the level of alliances formed with partners from local emerging economies through identifying areas of likely compatibility.
Morten Ougaard
- Published in print:
- 2010
- Published Online:
- September 2010
- ISBN:
- 9780199591145
- eISBN:
- 9780191594601
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199591145.003.0002
- Subject:
- Political Science, International Relations and Politics, Political Economy
Chapter 2 analyzes the OECD's roles in global governance. The organization is a network of trans‐governmental networks linking government bureaucracies in member and (increasingly also) ...
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Chapter 2 analyzes the OECD's roles in global governance. The organization is a network of trans‐governmental networks linking government bureaucracies in member and (increasingly also) non‐member states, emerging economies in particular. Its institutional advantages are its broad and select member‐ship, and its ability to work with practically all policy areas. In a highly variable and flexible in‐stitutional geometry, the OECD is the site for a range of governance activities pertaining to agenda setting, soft harmonization of national policies across multiple policy areas, and hard regulation in the form of conventions and other instruments where the OECD represents a forum for inter‐state decision making as well as policy implementation. Morten Ougaard argues that the OECD facilitates the development of joint responses to common challenges and consensus on broad contours of strategic direction setting in macro‐economic and other policy areas. It is a forum and force for soft and gradual political integration among members.Less
Chapter 2 analyzes the OECD's roles in global governance. The organization is a network of trans‐governmental networks linking government bureaucracies in member and (increasingly also) non‐member states, emerging economies in particular. Its institutional advantages are its broad and select member‐ship, and its ability to work with practically all policy areas. In a highly variable and flexible in‐stitutional geometry, the OECD is the site for a range of governance activities pertaining to agenda setting, soft harmonization of national policies across multiple policy areas, and hard regulation in the form of conventions and other instruments where the OECD represents a forum for inter‐state decision making as well as policy implementation. Morten Ougaard argues that the OECD facilitates the development of joint responses to common challenges and consensus on broad contours of strategic direction setting in macro‐economic and other policy areas. It is a forum and force for soft and gradual political integration among members.
Guillermo A. Calvo and Ernesto Talvi
- Published in print:
- 2008
- Published Online:
- May 2008
- ISBN:
- 9780199534081
- eISBN:
- 9780191714658
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199534081.003.0008
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter shows that the Russian 1998 crisis had a big impact on capital flows to Emerging Market Economies (EMEs), especially in Latin America, and that the impact of the Russian shock differs ...
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This chapter shows that the Russian 1998 crisis had a big impact on capital flows to Emerging Market Economies (EMEs), especially in Latin America, and that the impact of the Russian shock differs quite markedly across EMEs. To illustrate this statement, the polar cases of Chile and Argentina are compared. While Chile exhibited a significant economic slowdown after August 1998, it did not suffer the excruciating collapse suffered by Argentina, where even the payments system came to a full stop. This difference is attributed to the fact that Chile is more open to trade than Argentina, and that it appears to suffer much less from balance-sheet currency-denomination mismatch that was rampant in Argentina before the 2002 crisis (due to large domestic liability dollarization). The chapter is essentially descriptive but is in line with and, thus, complements econometric studies like Calvo, Izquierdo, and Mejia (NBER Working Paper 10520). The final section addresses policy issues in light of the chapter's findings and conjectures.Less
This chapter shows that the Russian 1998 crisis had a big impact on capital flows to Emerging Market Economies (EMEs), especially in Latin America, and that the impact of the Russian shock differs quite markedly across EMEs. To illustrate this statement, the polar cases of Chile and Argentina are compared. While Chile exhibited a significant economic slowdown after August 1998, it did not suffer the excruciating collapse suffered by Argentina, where even the payments system came to a full stop. This difference is attributed to the fact that Chile is more open to trade than Argentina, and that it appears to suffer much less from balance-sheet currency-denomination mismatch that was rampant in Argentina before the 2002 crisis (due to large domestic liability dollarization). The chapter is essentially descriptive but is in line with and, thus, complements econometric studies like Calvo, Izquierdo, and Mejia (NBER Working Paper 10520). The final section addresses policy issues in light of the chapter's findings and conjectures.
Max H. Boisot
- Published in print:
- 1999
- Published Online:
- October 2011
- ISBN:
- 9780198296072
- eISBN:
- 9780191685194
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198296072.003.0011
- Subject:
- Business and Management, Knowledge Management, Organization Studies
This final chapter explores the broader implications of the analysis for strategic management of knowledge assets in the twenty-first century. In industrialized countries, this kind of management ...
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This final chapter explores the broader implications of the analysis for strategic management of knowledge assets in the twenty-first century. In industrialized countries, this kind of management perhaps holds the key to continued prosperity and social stability. In the emerging economies it offers the prospect of by-passing the dreadful and dehumanizing experience of industrialization through which developed countries initially secured their wealth. As things stand, neither industrialized nor industrializing economies have yet developed a managerial orientation appropriate to the needs of the information economy in general, or the phenomenon of knowledge assets in particular. It has been shown here that far more important than having the physical resources is the ability to do something intelligent with them.Less
This final chapter explores the broader implications of the analysis for strategic management of knowledge assets in the twenty-first century. In industrialized countries, this kind of management perhaps holds the key to continued prosperity and social stability. In the emerging economies it offers the prospect of by-passing the dreadful and dehumanizing experience of industrialization through which developed countries initially secured their wealth. As things stand, neither industrialized nor industrializing economies have yet developed a managerial orientation appropriate to the needs of the information economy in general, or the phenomenon of knowledge assets in particular. It has been shown here that far more important than having the physical resources is the ability to do something intelligent with them.
Javier Santiso
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9780262019002
- eISBN:
- 9780262313704
- Item type:
- book
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262019002.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking
Politics matter for financial markets and financial markets matter for politics, and nowhere is this relationship more apparent than in emerging markets. This book investigates the links between ...
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Politics matter for financial markets and financial markets matter for politics, and nowhere is this relationship more apparent than in emerging markets. This book investigates the links between politics and finance in countries that have recently experienced both economic and democratic transitions. It focuses on elections, investigating whether there is a “democratic premium”—whether financial markets and investors tend to react positively to elections in emerging markets. Special attention is devoted to Latin America, where over the last three decades many countries became democracies, with regular elections, just as they also became open economies dependent on foreign capital and dominated bond markets. The analysis draws on a unique set of primary databases covering an entire decade: more than 5,000 bank and fund manager portfolio recommendations on emerging markets. The book examines the trajectory of Brazil, for example, through its presidential elections of 2002, 2006, and 2010 and finds a decoupling of financial and political cycles that occurred also in many other emerging economies. It charts this evolution through the behavior of brokers, analysts, fund managers, and bankers. Ironically, while some emerging markets have decoupled politics and finance, in the wake of the 2008–2012 financial crisis many developed economies (Europe and the United States) have experienced a recoupling between finance and politics.Less
Politics matter for financial markets and financial markets matter for politics, and nowhere is this relationship more apparent than in emerging markets. This book investigates the links between politics and finance in countries that have recently experienced both economic and democratic transitions. It focuses on elections, investigating whether there is a “democratic premium”—whether financial markets and investors tend to react positively to elections in emerging markets. Special attention is devoted to Latin America, where over the last three decades many countries became democracies, with regular elections, just as they also became open economies dependent on foreign capital and dominated bond markets. The analysis draws on a unique set of primary databases covering an entire decade: more than 5,000 bank and fund manager portfolio recommendations on emerging markets. The book examines the trajectory of Brazil, for example, through its presidential elections of 2002, 2006, and 2010 and finds a decoupling of financial and political cycles that occurred also in many other emerging economies. It charts this evolution through the behavior of brokers, analysts, fund managers, and bankers. Ironically, while some emerging markets have decoupled politics and finance, in the wake of the 2008–2012 financial crisis many developed economies (Europe and the United States) have experienced a recoupling between finance and politics.
Volbert Alexander, George M. von Furstenberg, and Jacques Mélitz (eds)
- Published in print:
- 2004
- Published Online:
- August 2004
- ISBN:
- 9780199271405
- eISBN:
- 9780191601200
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199271402.001.0001
- Subject:
- Economics and Finance, Economic Systems
Financial services with global reach are a highly information-intensive business. In it, the ability to deliver reliable price formation, global liquidity, and network benefits is increasingly ...
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Financial services with global reach are a highly information-intensive business. In it, the ability to deliver reliable price formation, global liquidity, and network benefits is increasingly critical for the choice of currency denomination. Conversely, the exchange value and prospective usefulness of small currencies becomes less certain, and transaction costs for them may rise. Economic instability is invited as currency and portfolio substitution with the dominant international currency denomination increase the likelihood of currency mismatches and financial crises. In view of these failings of many of the financially small currencies, the number of currencies worldwide well may shrink greatly in the decades ahead.Drawing lessons mostly from contemporary developments, this book analyzes current approaches to overcoming excessive monetary division within integrating regions. It focuses on the effects of monetary or currency unions on trade among members and on their financial development and stability. In the process, contributors analyze the promise and subversion of hard pegs such as that attempted by the currency board of Argentina. They also examine unilateral dollarization -- adopted in a few countries formally, and in many more informally without giving up the local currency -- and multilateral monetary union in Europe. There the euro functions as an innovative, non-hegemonic form of internationally shared and co-managed fiat money that will also be adopted by the 2004 class of European-Union accession countries in coming years.Less
Financial services with global reach are a highly information-intensive business. In it, the ability to deliver reliable price formation, global liquidity, and network benefits is increasingly critical for the choice of currency denomination. Conversely, the exchange value and prospective usefulness of small currencies becomes less certain, and transaction costs for them may rise. Economic instability is invited as currency and portfolio substitution with the dominant international currency denomination increase the likelihood of currency mismatches and financial crises. In view of these failings of many of the financially small currencies, the number of currencies worldwide well may shrink greatly in the decades ahead.
Drawing lessons mostly from contemporary developments, this book analyzes current approaches to overcoming excessive monetary division within integrating regions. It focuses on the effects of monetary or currency unions on trade among members and on their financial development and stability. In the process, contributors analyze the promise and subversion of hard pegs such as that attempted by the currency board of Argentina. They also examine unilateral dollarization -- adopted in a few countries formally, and in many more informally without giving up the local currency -- and multilateral monetary union in Europe. There the euro functions as an innovative, non-hegemonic form of internationally shared and co-managed fiat money that will also be adopted by the 2004 class of European-Union accession countries in coming years.
John Child, David Faulkner, Stephen Tallman, and Linda Hsieh
- Published in print:
- 2019
- Published Online:
- June 2019
- ISBN:
- 9780198814634
- eISBN:
- 9780191852374
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198814634.003.0022
- Subject:
- Business and Management, Strategy
Chapter 22 notes the growing attraction of emerging economies as host locations for foreign direct investment (FDI). While acquisitions are generally the favored mode of FDI into developed-economy ...
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Chapter 22 notes the growing attraction of emerging economies as host locations for foreign direct investment (FDI). While acquisitions are generally the favored mode of FDI into developed-economy markets, cooperative forms allowing for local participation, such as joint ventures, have been more prevalent in emerging economies, often due to the mandatory requirements of host governments. Emerging economies are distinctive environments for MNEs partnering with local firms, and this can give rise to certain challenges. One is a conflict of objectives held by MNEs and their emerging economy alliance partner(s), with the latter prioritizing defensive and developmental needs. Additionally, the number of multinationals from emerging economy firms (EMNEs) has grown substantially, often internationalizing through alliances with developed economy MNEs as well as with firms in other emerging economies.Less
Chapter 22 notes the growing attraction of emerging economies as host locations for foreign direct investment (FDI). While acquisitions are generally the favored mode of FDI into developed-economy markets, cooperative forms allowing for local participation, such as joint ventures, have been more prevalent in emerging economies, often due to the mandatory requirements of host governments. Emerging economies are distinctive environments for MNEs partnering with local firms, and this can give rise to certain challenges. One is a conflict of objectives held by MNEs and their emerging economy alliance partner(s), with the latter prioritizing defensive and developmental needs. Additionally, the number of multinationals from emerging economy firms (EMNEs) has grown substantially, often internationalizing through alliances with developed economy MNEs as well as with firms in other emerging economies.
Stephany Griffith-Jones, Manuel F. Montes, and Anwar Nasution (eds)
- Published in print:
- 2001
- Published Online:
- October 2011
- ISBN:
- 9780198296867
- eISBN:
- 9780191685286
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198296867.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental, Macro- and Monetary Economics
The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 — and their high development costs — raise a serious concern about the net benefits for developing countries of large ...
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The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 — and their high development costs — raise a serious concern about the net benefits for developing countries of large flows of potentially reversible short-term international capital. This book examines in depth the macroeconomic and other policy dilemmas confronting public authorities in the emerging economies as they deal with short-term capital movements, especially in the period before the outbreak of these crises. The studies are based on comparative case studies of key emerging economies. Valuable insights are also derived from contrasts between the East Asian, Latin American, African, and European experiences, between the financial and real effects of financial flows, and between private and public responsibilities in managing financial markets. This book analytically identifies the weaknesses in both domestic and international capital market regimes. The recommendations derived from this analysis apply to the development of financial markets in developing countries, the monitoring and regulation of mutual funds in source countries, and the future development of international capital markets.Less
The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 — and their high development costs — raise a serious concern about the net benefits for developing countries of large flows of potentially reversible short-term international capital. This book examines in depth the macroeconomic and other policy dilemmas confronting public authorities in the emerging economies as they deal with short-term capital movements, especially in the period before the outbreak of these crises. The studies are based on comparative case studies of key emerging economies. Valuable insights are also derived from contrasts between the East Asian, Latin American, African, and European experiences, between the financial and real effects of financial flows, and between private and public responsibilities in managing financial markets. This book analytically identifies the weaknesses in both domestic and international capital market regimes. The recommendations derived from this analysis apply to the development of financial markets in developing countries, the monitoring and regulation of mutual funds in source countries, and the future development of international capital markets.
Ansgar Belke and Ulrich Volz
- Published in print:
- 2019
- Published Online:
- August 2019
- ISBN:
- 9780198838104
- eISBN:
- 9780191874628
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198838104.003.0012
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
This chapter explores the impact of advanced countries’ quantitative easing on emerging market economies (EMEs) and how macroprudential policy and good governance play a role in preventing potential ...
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This chapter explores the impact of advanced countries’ quantitative easing on emerging market economies (EMEs) and how macroprudential policy and good governance play a role in preventing potential financial vulnerabilities. We use confidential locational bank statistics data from the Bank for International Settlements to examine whether quantitative easing has caused an appreciation of EMEs’ currencies and how it has done so, and whether this has in turn boosted foreign-currency borrowing, thus making EMEs vulnerable to balance sheet and maturity mismatch problems. While focusing our analysis on East Asian economies, we compare them with Latin American economies, which were also major recipients of quantitative easing capital inflows. We find that government effectiveness plays an important role in curbing excessive borrowing when the exchange rate is overvalued.Less
This chapter explores the impact of advanced countries’ quantitative easing on emerging market economies (EMEs) and how macroprudential policy and good governance play a role in preventing potential financial vulnerabilities. We use confidential locational bank statistics data from the Bank for International Settlements to examine whether quantitative easing has caused an appreciation of EMEs’ currencies and how it has done so, and whether this has in turn boosted foreign-currency borrowing, thus making EMEs vulnerable to balance sheet and maturity mismatch problems. While focusing our analysis on East Asian economies, we compare them with Latin American economies, which were also major recipients of quantitative easing capital inflows. We find that government effectiveness plays an important role in curbing excessive borrowing when the exchange rate is overvalued.
Jiri Jonas and Iva Petrova
- Published in print:
- 2014
- Published Online:
- September 2015
- ISBN:
- 9780262027182
- eISBN:
- 9780262324113
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027182.003.0007
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines the state of fiscal accounts in advanced and emerging market economies from the postwar period until the outburst of the 2007 financial crisis, revealing some early symptoms of ...
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This chapter examines the state of fiscal accounts in advanced and emerging market economies from the postwar period until the outburst of the 2007 financial crisis, revealing some early symptoms of fiscal profligacy that eventually degenerated into fiscal stress. In G7 countries, general government expenditures grew persistently, from 25 percent of GDP in 1950 to 40 percent in the early 1990s. Initially, increasing expenditures were paid for by increasing revenues, but these were eventually accommodated by wider deficits and growing debt. After reaching a postwar low of 35 percent of GDP in the mid-1970s, helped by a negative interest-rate growth differential, the debt-to-GDP ratio stood at 84 percent by the time the crisis erupted. The reduction in fiscal deficits in advanced economies just before the crisis reflected largely temporary factors: equity prices added about 1.5 percent of GDP to revenues in advanced G20 countries, while housing prices, at their peak prior to the crisis, improved revenues in several European Union countries by about 2 percent of GDP.Less
This chapter examines the state of fiscal accounts in advanced and emerging market economies from the postwar period until the outburst of the 2007 financial crisis, revealing some early symptoms of fiscal profligacy that eventually degenerated into fiscal stress. In G7 countries, general government expenditures grew persistently, from 25 percent of GDP in 1950 to 40 percent in the early 1990s. Initially, increasing expenditures were paid for by increasing revenues, but these were eventually accommodated by wider deficits and growing debt. After reaching a postwar low of 35 percent of GDP in the mid-1970s, helped by a negative interest-rate growth differential, the debt-to-GDP ratio stood at 84 percent by the time the crisis erupted. The reduction in fiscal deficits in advanced economies just before the crisis reflected largely temporary factors: equity prices added about 1.5 percent of GDP to revenues in advanced G20 countries, while housing prices, at their peak prior to the crisis, improved revenues in several European Union countries by about 2 percent of GDP.
Jeffrey A. Frankel, Nouriel Roubini, Mervyn King, Robert Rubin, and George Soros
- Published in print:
- 2003
- Published Online:
- February 2013
- ISBN:
- 9780226241098
- eISBN:
- 9780226241104
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226241104.003.0004
- Subject:
- Economics and Finance, International
This chapter examines the impact of the financial policies of industrial countries on the financial crises in emerging market economies. It analyzes the macroeconomic policies of the Group of Seven ...
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This chapter examines the impact of the financial policies of industrial countries on the financial crises in emerging market economies. It analyzes the macroeconomic policies of the Group of Seven (G7) countries and the role of the G7 and the International Monetary Fund (IMF) in the management of international crises. This chapter identifies macroeconomic variables in industrialized countries that have major short-term impact on developing countries including growth rates, real interest rates and exchange rates.Less
This chapter examines the impact of the financial policies of industrial countries on the financial crises in emerging market economies. It analyzes the macroeconomic policies of the Group of Seven (G7) countries and the role of the G7 and the International Monetary Fund (IMF) in the management of international crises. This chapter identifies macroeconomic variables in industrialized countries that have major short-term impact on developing countries including growth rates, real interest rates and exchange rates.
Elif Arbatli, Thomas Baunsgaard, Alejandro Guerson, and Kyung-Seol Min
- Published in print:
- 2014
- Published Online:
- September 2015
- ISBN:
- 9780262027182
- eISBN:
- 9780262324113
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027182.003.0011
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines how countries employed activist fiscal policies in response to the sharp decline in global growth following the financial crisis of 2007. In particular, it provides an in-depth ...
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This chapter examines how countries employed activist fiscal policies in response to the sharp decline in global growth following the financial crisis of 2007. In particular, it provides an in-depth analysis of the timing, size, and composition of fiscal stimulus packages in advanced and emerging market economies as well as the issues related to their implementation. It first summarizes some of the empirical evidence on whether an expansionary fiscal policy response was appropriate. It then shows that public debts increased dramatically from 2008 to 2010, especially in advanced economies. The substantial rise in fiscal deficits and debt ratios was not caused primarily by the fiscal stimulus, but by a decline in government revenues and, to a lesser extent, government support to the financial sector. Although fiscal stimulus packages varied across countries, these differences were generally consistent with each country's economic fundamentals, including available fiscal space, the severity of the downturn in domestic economic activity, the ability and space to use monetary policy, and the degree of trade openness that dilutes the effect of fiscal stimuli on the domestic economy.Less
This chapter examines how countries employed activist fiscal policies in response to the sharp decline in global growth following the financial crisis of 2007. In particular, it provides an in-depth analysis of the timing, size, and composition of fiscal stimulus packages in advanced and emerging market economies as well as the issues related to their implementation. It first summarizes some of the empirical evidence on whether an expansionary fiscal policy response was appropriate. It then shows that public debts increased dramatically from 2008 to 2010, especially in advanced economies. The substantial rise in fiscal deficits and debt ratios was not caused primarily by the fiscal stimulus, but by a decline in government revenues and, to a lesser extent, government support to the financial sector. Although fiscal stimulus packages varied across countries, these differences were generally consistent with each country's economic fundamentals, including available fiscal space, the severity of the downturn in domestic economic activity, the ability and space to use monetary policy, and the degree of trade openness that dilutes the effect of fiscal stimuli on the domestic economy.
Carlos Capistrán, Gabriel Cuadra, and Manuel Ramos-Francia
- Published in print:
- 2013
- Published Online:
- January 2015
- ISBN:
- 9780262018340
- eISBN:
- 9780262305921
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262018340.003.0009
- Subject:
- Economics and Finance, Financial Economics
Emerging economies have been subject to abrupt reversals in capital flows, which have adverse consequences for economic activity and financial stability. An important question for policymakers is how ...
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Emerging economies have been subject to abrupt reversals in capital flows, which have adverse consequences for economic activity and financial stability. An important question for policymakers is how to respond to a sudden loss of external financing and its negative effects on the domestic economy. The experience of emerging economies throughout the recent financial crisis shows that those economies with relatively better economic fundamentals were able to implement countercyclical policies. This chapter provides a simple analytical framework to rationalize this evidence. In particular, it addresses this issue by developing a small-scale macroeconomic model of the New-Keynesian type. Numerical exercises illustrate how both credible monetary and fiscal policies increase policymakers’ degrees of freedom to respond to adverse external shocks.Less
Emerging economies have been subject to abrupt reversals in capital flows, which have adverse consequences for economic activity and financial stability. An important question for policymakers is how to respond to a sudden loss of external financing and its negative effects on the domestic economy. The experience of emerging economies throughout the recent financial crisis shows that those economies with relatively better economic fundamentals were able to implement countercyclical policies. This chapter provides a simple analytical framework to rationalize this evidence. In particular, it addresses this issue by developing a small-scale macroeconomic model of the New-Keynesian type. Numerical exercises illustrate how both credible monetary and fiscal policies increase policymakers’ degrees of freedom to respond to adverse external shocks.
Baoping Shang and Mauricio Soto
- Published in print:
- 2014
- Published Online:
- September 2015
- ISBN:
- 9780262027182
- eISBN:
- 9780262324113
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027182.003.0020
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines public spending on pensions and health care as well as the rapid growth and projected increase of these costs in relation to GDP in advanced and emerging economies over the next ...
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This chapter examines public spending on pensions and health care as well as the rapid growth and projected increase of these costs in relation to GDP in advanced and emerging economies over the next two decades, suggesting that such increases will add to the already urgent need for fiscal adjustment in many countries. It first presents projections for spending in both public pensions and health care for twenty-eight advanced and twenty-two emerging economies before discussing reform options to improve the long-term sustainability and performance of public pension and health care systems while safeguarding the most vulnerable. For countries with large projected spending increases and limited fiscal space, the challenge is to contain the growth of public pension and health spending without adversely affecting the social objectives of these programs. The viable options to contain pension spending include curtailing eligibility, reducing benefits, or increasing contributions. While all of these options involve apparent trade-offs, increasing the retirement age has many advantages. Containing public health spending requires a mix of macro-level controls, such as imposing budget caps, and microlevel efficiency-enhancing reforms, such as strengthening market mechanisms.Less
This chapter examines public spending on pensions and health care as well as the rapid growth and projected increase of these costs in relation to GDP in advanced and emerging economies over the next two decades, suggesting that such increases will add to the already urgent need for fiscal adjustment in many countries. It first presents projections for spending in both public pensions and health care for twenty-eight advanced and twenty-two emerging economies before discussing reform options to improve the long-term sustainability and performance of public pension and health care systems while safeguarding the most vulnerable. For countries with large projected spending increases and limited fiscal space, the challenge is to contain the growth of public pension and health spending without adversely affecting the social objectives of these programs. The viable options to contain pension spending include curtailing eligibility, reducing benefits, or increasing contributions. While all of these options involve apparent trade-offs, increasing the retirement age has many advantages. Containing public health spending requires a mix of macro-level controls, such as imposing budget caps, and microlevel efficiency-enhancing reforms, such as strengthening market mechanisms.
Peter Tillmann
- Published in print:
- 2019
- Published Online:
- August 2019
- ISBN:
- 9780198838104
- eISBN:
- 9780191874628
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198838104.003.0003
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
It is well known that a tightening or easing of the United States’ monetary policy affects financial markets in emerging economies. This chapter argues that uncertainty about future monetary policy ...
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It is well known that a tightening or easing of the United States’ monetary policy affects financial markets in emerging economies. This chapter argues that uncertainty about future monetary policy is a separate transmission channel. We focus on the taper tantrum episode in 2013, a period with an elevated uncertainty about monetary policy, and use a data set that contains 90,000 Twitter messages on Federal Reserve tapering. Based on this data set, we construct a new index about monetary policy uncertainty using a list of uncertainty keywords. An advantage of this index is that it reflects uncertainty about a specific policy decision. An estimated vector autoregression (VAR) shows that uncertainty shocks lead to a fall in asset prices and a depreciation of local currencies. We also discuss the policy implications of this uncertainty channel of monetary policy transmission.Less
It is well known that a tightening or easing of the United States’ monetary policy affects financial markets in emerging economies. This chapter argues that uncertainty about future monetary policy is a separate transmission channel. We focus on the taper tantrum episode in 2013, a period with an elevated uncertainty about monetary policy, and use a data set that contains 90,000 Twitter messages on Federal Reserve tapering. Based on this data set, we construct a new index about monetary policy uncertainty using a list of uncertainty keywords. An advantage of this index is that it reflects uncertainty about a specific policy decision. An estimated vector autoregression (VAR) shows that uncertainty shocks lead to a fall in asset prices and a depreciation of local currencies. We also discuss the policy implications of this uncertainty channel of monetary policy transmission.
Qianying Chen, Andrew Filardo, Dong He, and Feng Zhu
- Published in print:
- 2019
- Published Online:
- August 2019
- ISBN:
- 9780198838104
- eISBN:
- 9780191874628
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198838104.003.0008
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
This is a chapter of the domestic impact as well as cross-border spillovers of US monetary policy at the zero lower bound (ZLB) to advanced and emerging economies. We estimate the empirical relevance ...
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This is a chapter of the domestic impact as well as cross-border spillovers of US monetary policy at the zero lower bound (ZLB) to advanced and emerging economies. We estimate the empirical relevance of the various channels of international policy transmission with a global vector error correction macroeconometric model. To address the challenge of measuring the stance of monetary policy at the ZLB, we proxy it with a shadow federal funds rate, which captures the impact of central bank balance sheet policies. We find evidence that US monetary policy was effective in stimulating the US economy. For many of the other economies, the spillovers from the quantitative easing had sizeable and persistent impacts on output growth, inflation, and equity returns. The responses in the emerging economies were rather diverse. In terms of exchange rates, a number of emerging economy currencies faced strong appreciation pressures (e.g. Malaysian ringgit and Korean won).Less
This is a chapter of the domestic impact as well as cross-border spillovers of US monetary policy at the zero lower bound (ZLB) to advanced and emerging economies. We estimate the empirical relevance of the various channels of international policy transmission with a global vector error correction macroeconometric model. To address the challenge of measuring the stance of monetary policy at the ZLB, we proxy it with a shadow federal funds rate, which captures the impact of central bank balance sheet policies. We find evidence that US monetary policy was effective in stimulating the US economy. For many of the other economies, the spillovers from the quantitative easing had sizeable and persistent impacts on output growth, inflation, and equity returns. The responses in the emerging economies were rather diverse. In terms of exchange rates, a number of emerging economy currencies faced strong appreciation pressures (e.g. Malaysian ringgit and Korean won).
