Academic Commons

Reports

From the Boom in Capital Inflows to Financial Traps

Frenkel, Roberto

The paper examines the performance of highly indebted countries from the point of view of their links with the international financial market. Although the more analytical parts of the paper do not refer specifically to Latin America (LA) it consider the regional emergent markets experiences as examples and historical background. Two reasons explain the focus: LA countries participated in the financial globalization process from the beginning, in the late sixties-early seventies and the most important cases of high indebtedness took place in the region. The paths followed by some countries in the globalization process led them to situations of segmented integration. Persistently high country risk premiums place the country in a sort of financial trap, with high interest rate and low growth, highly vulnerable to contagion and other sources of volatility and imposing narrow limits to the degrees of freedom of economic policy. The paper suggests that domestic policy implemented during the process of financial integration, account for most of the variation in the present situation of the different emergent markets.

Files

More About This Work

Academic Units
Initiative for Policy Dialogue
Publisher
Initiative for Policy Dialogue
Series
Initiative for Policy Dialogue Working Paper Series
Published Here
February 2, 2010

Notes

The opinions expressed in these papers represent those of the author(s) and not The Initiative for Policy Dialogue. These papers are unpublished and have not been peer reviewed. Please do not cite without explicit permission from the author(s).

Academic Commons provides global access to research and scholarship produced at Columbia University, Barnard College, Teachers College, Union Theological Seminary and Jewish Theological Seminary. Academic Commons is managed by the Columbia University Libraries.