Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190225 
Authors: 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 804
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
This paper seeks to draw lessons for developing countries based on a survey of the recent literature on financial globalization. First, while capital account openness holds promises (by potentially generating a lower cost of capital, better risk sharing, and stronger disciplines on policies), they do not always work out that way in the data. Distortions in the domestic financial market, international capital market, domestic labor market, and domestic public governance can all make financial globalization less beneficial for developing countries. Second, developing countries sometimes need to insulate themselves from foreign monetary policy shocks. The empirical pattern appears to be somewhere between a trilemma and a dilemma. While nominal exchange rate flexibility is insufficient for policy autonomy, capital flow management may be needed to confer more monetary policy autonomy.
Subjects: 
financial globalization
monetary policy autonomy
overborrowing
capital flow management
JEL: 
E42
E43
E52
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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