Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/277195 
Authors: 
Year of Publication: 
2010
Citation: 
[Journal:] Intervention. European Journal of Economics and Economic Policies [ISSN:] 2195-3376 [Volume:] 07 [Issue:] 2 [Year:] 2010 [Pages:] 325-359
Publisher: 
Metropolis-Verlag, Marburg
Abstract: 
This paper investigates the spread of what started as a crisis at the core of the global financial system to emerging economies. While emerging economies had exhibited some resilience through the early stages of the financial turmoil that began in the summer of 2007, they have been hit hard since mid-2008. Their deteriorating fortunes are only partly attributable to the collapse in world trade and sharp drop in commodity prices. Things were made worse by emerging markets' exposure to the turmoil in global finance itself. As 'innocent bystanders', even countries that had taken out 'self-insurance' proved vulnerable to the global 'sudden stop' in capital flows. We critique loanable funds theoretical interpretations of global imbalances and offer an alternative explanation that emphasizes the special status of the US dollar. Instead of taking out even more self-insurance, developing countries should pursue capital account management to enlarge their policy space and reduce external vulnerabilities.
Subjects: 
financial crisis
capital flows
self-insurance
capital controls
Bretton Woods II Hypothesis
Global Saving Glut Hypothesis
JEL: 
E12
E43
E44
F02
F10
F32
F33
F42
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.