A large amount of carry trade was drawn to Iceland in the boom leading up to the crisis of early October 2008 (Danielsson and Arnason 2011, Baldursson and Portes 2013a). As pressure mounted on the Icelandic banks, investors increasingly chose to exit the krona, which depreciated by 25% during the week before the banks collapsed. As the banks went down, the krona depreciated even further.
Capital controls and the resolution of failed cross-border banks: The case of Iceland
Friðrik Már Baldursson, Richard Portes, 12 November 2013
Independent monetary policies, synchronised outcomes
Espen Henriksen, Finn Kydland, Roman Šustek, 2 October 2013
The recession in the Eurozone has given new life to optimal-currency-area thinking. The argument goes that the disadvantages of a single currency come from the loss of flexibility and ability to use monetary policy to respond to “asymmetric shocks” (Krugman and Obstfeld 2009).
Is there a dilemma with the Trilemma?
Michael W Klein, Jay C. Shambaugh , 27 September 2013
In the Handbook of Safeguarding Global Financial Stability, the chapter “Capital Mobility and Exchange Rate Regimes” begins “Forced to state all the insights of international macroeconomics while standing on one leg, one could do worse than raise a foot off the ground and say something like:
Dilemma not Trilemma: The global financial cycle and monetary policy independence
Hélène Rey, 31 August 2013
Looking at the evolution of financial integration over the past half‐century in the world economy, one might conclude that financial openness is an irresistible long-run trend, hailed by policymakers and academic economists alike. Both emerging markets and advanced economies have increasingly opened their borders to financial flows.
The capital controls in Cyprus and the Icelandic experience
Jon Danielsson, 28 March 2013
The Cypriot government, European authorities and the IMF have concluded that capital controls are the best way to prevent a total collapse of the Cypriot financial system. Motivated by the obvious fear that anybody with money left over in Cyprus will seek to take their money out as soon as possible, temporary capital controls are to be put in place to prevent this.
Brazil: Did inward capital controls work?
Márcio Garcia, 1 March 2013
As the developed economies struggle to revive growth and create jobs, the debate about currency wars has come to forefront, with generalised quantitative easing, an EU Tobin tax, and confusing comments from G7 official regarding the effects of Abenomics on the yen.
The Brazilian competitiveness cliff
Otaviano Canuto, Matheus Cavallari, José Guilherme Reis, 27 February 2013
The Brazilian economy is facing considerable competitiveness challenges (Bonelli and Pinheiro 2012). After several years of strong expansion, the recent slowdown seems related to supply-side difficulties stemming from a wide range of inefficiencies and rising costs, rather than insufficient aggregate demand.
Capital controls: Gates versus walls
Michael W Klein, 17 January 2013
Capital controls are no longer considered rogue policies.
The multilateral approach to capital controls
Olivier Blanchard, Jonathan D Ostry, 11 December 2012
Paul Krugman blogged a few days ago about the “surprising intellectual flexibility” of the IMF in endorsing the use of capital controls to “calm volatile cross-border flows” (Krugman 2012).
How effective were the 2008-2011 capital controls in Brazil?
Yothin Jinjarak, Ilan Noy, Huanhuan Zheng, 22 November 2012
Controls on capital inflows have seen a renaissance since the beginning of the global financial crisis in 2008 (Williamson, Jeanne, and Subramanian 2012) and many countries, including Thailand, South Korea, Peru, Indonesia, Brazil and Iceland, have imposed controls.
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- The ECB’s stealth bailoutSinn
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
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Adelman, 28 October 2013
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Holmes, McGrattan, Prescott
Beck, De Haas, Ongena
CEPR Policy Research
- The buyer margins of firms' exportsCarballo, Ottaviano, Volpe
- Commodity and Equity Markets: Some Stylized Facts from a Copula ApproachDelatte, Lopez
- Ethnic Unemployment Rates and Frictional MarketsGobillon, Rupert, Wasmer
- Finance and Poverty: Evidence from IndiaAyyagari, Beck, Hoseini
- The Manipulation of Basel Risk-WeightsMariathasan, Merrouche
- What’s wrong with Europe?Baldini, Manasse
- How the EZ crisis is permanently changing EU institutionsMicossi
- WTO 2.0: Global governance of supply-chain tradeBaldwin
- Is US economic growth over? Faltering innovation confronts the six headwindsGordon
- The economic crisis: How to stimulate economies without increasing public debtWood