In a recent survey, Kose et al (2006) find little robust evidence for long-run growth benefits from global capital inflows. Prasad et al (2006) go a step further.
Growth from international capital flows: The role of volatility regimes
Ashoka Mody, Antu Panini Murshid, 27 November 2011
On the tradeoff between growth and stability: The role of financial markets
Alexander Popov, Frank Smets, 3 November 2011
In the two decades leading to the Great Recession, academics had mostly converged on Schumpeter’s view that well-developed financial systems play a crucial role in stimulating economic growth.
The risk in carry trades
Lukas Menkhoff, Lucio Sarno, Maik Schmeling, Andreas Schrimpf, 23 March 2011
The “carry trade” is the most popular trading strategy in currency markets. Traders borrow in currencies with low interest rates (negative forward premium) and invest in currencies with high interest rates (positive forward premium), profiting from the margin. Yet according to the uncovered interest parity this strategy should not work.
Does openness increase volatility? Not if countries are sufficiently diversified
Mona Haddad, Jamus Lim, Christian Saborowski, 21 March 2010
The epicentre of the global economic crisis was the financial markets of the industrialised world, yet developing countries have felt the tremors. Many, including those without close financial ties to the developed world, were driven into recession as global demand plummeted and the largest drop in global trade volumes since the Second World War ensued.
The oil price and the macroeconomy: What’s going on?
Olivier Blanchard, Marianna Riggi, 7 December 2009
Whereas in the 1970s large increases in the price of oil were associated with sharp decreases in output and large increases in inflation, in the 2000s, and at least until the end of 2007, even larger increases in the price of oil were associated with much milder movements in output and inflation. What has happened to the oil-macroeconomy relationship?
Democracy, diversification, and growth reversals
David Cuberes, Michal Jerzmanowski, 15 August 2009
The last twenty-five years have been a period of remarkable stability among developed economies. This stability, termed by some “The Great Moderation”, has been particularly noteworthy in its contrast with the instability experienced by developing economies. Poor countries suffer not only from persistently low incomes but also from large doses of economic volatility.
Financial factors and the current account: Is volatility a concern?
Rebecca Hellerstein, Cédric Tille, 21 August 2008
The surge in financial globalisation constitutes one of the major developments in the world economy since the mid-1990s, with Lane and Milesi-Ferretti (2007) documenting a large rise in most countries’ holdings of external assets and liabilities.
Can we predict exchange rates? Economic evidence against the random walk model
Pasquale Della Corte, Lucio Sarno, Ilias Tsiakas, 18 January 2008
Exchange rates are important to innumerable economic activities. Tourists care about the value of their home currency abroad. Investors care about the effect of exchange rate fluctuations on their international portfolios.
International Financial Stability
Roger W. Ferguson. Jr., Philipp Hartmann, Fabio Panetta, Richard Portes, 15 November 2007
Regulating the international financial system: towards a more balanced, market-based model
Richard Portes, 15 November 2007
The global financial system shows signs of stress, but why should policy-makers care?
Topics: Financial markets
Tags: buy and hold, carry trade, financial stability, global imbalances, hedge funds, large complex financial institutions, originate to distribute, ratings, strutured finance, subprime crisis, tail risk, volatility
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