Preventing Currency Crises in Emerging Markets

Preventing Currency Crises in Emerging Markets

Sebastian Edwards and Jeffrey A. Frankel

Print publication date: 2013

ISBN: 9780226184944

Publisher: University of Chicago Press

Abstract

Economists and policymakers are still trying to understand the lessons recent financial crises in Asia and other emerging market countries hold for the future of the global financial system. This book explores the causes of and effective policy responses to international currency crises. Topics covered include exchange rate regimes, contagion (transmission of currency crises across countries), the current account of the balance of payments, the role of private sector investors and of speculators, the reaction of the official sector (including the multilaterals), capital controls, bank supervision and weaknesses, and the roles of cronyism, corruption, and large players (including hedge funds). Balancing detailed case studies, cross-country comparisons, and theoretical concerns, this book aims to contribute to ongoing efforts to understand and prevent international currency crises.

Table of Contents

Introduction

Sebastian Edwards and Jeffrey A. Frankel

I The Current Account and Vulnerability to Crisis

II International Financial Players and Contagion

3 What Hurts Emerging Markets Most?

Carmen M. Reinhart and Vincent Raymond Reinhart

5 The Role of Large Players in Currency Crises

Giancarlo Corsetti, Paolo Pesenti, and Nouriel Roubini

6 Contagion

Roberto Rigobon

7 Credit, Prices, and Crashes

Enrique G. Mendoza

III Capital Controls

8 Did the Malaysian Capital Controls Work?

Ethan Kaplan and Dani Rodrik

9 Malaysia's Crisis

Rudi Dornbusch

IV Balance Sheets and “crony Capitalism”

10 Negative Alchemy?

Shang-Jin Wei and Yi Wu

12 Dollarization of Liabilities, Net Worth Effects, and Optimal Monetary Policy

Luis Felipe Céspedes, Roberto Chang, and Andrés Velasco

14 Living with the Fear of Floating

Amartya Lahiri and Carlos A. Végh

V Overview