The 1990s witnessed several
acute currency crises among developing nations that invariably spread to other nearby
at-risk countries. These episodes - in Mexico, Thailand, South Korea, Russia, and Brazil -
were all exacerbated by speculative foreign investments and high-volume movements of
capital in and out of those countries. Insufficient domestic controls and a sluggish
international response further undermined these economies, as well as the credibility of
external oversight agencies like the International Monetary Fund. This timely volume
examines the correlation between volatile capital mobility, currency instability, and the
threat of regional contagion, focusing particular attention on the emergent economies of
Latin America, Southeast Asia, and Eastern Europe. Together these studies offer a new
understanding of the empirical relationship between capital flows, international trade,
and economic performance, and also afford key insights into realms of major policy
concern.
Table of Contents
Acknowledgments
Introduction
Sebastian Edwards
I. Capital Flows to Developing Countries: Theoretical Aspects
1. Contagion, Globalization, and the Volatility of Capital Flows
Guillermo A. Calvo and Enrique G. Mendoza
Comment: Rudiger Dornbusch
2. Fire-Sale FDI
Paul Krugman
Comment: Aaron Tornell
3. Capital Flows to Emerging Markets: Liberalization, Overshooting, and Volatility
Philippe Bacchetta and Eric van Wincoop
Comment: Carmen M. Reinhart
II. Cross-Country
Evidence
4. What Explains Changing Spreads on Emerging Market Debt?
Barry Eichengreen and Ashoka Mody
Comment: Sylvia Maxfield
5. Is There a Curse of Location? Spatial Determinants of Capital Flows to Emerging Markets
Swati Ghosh and Holger Wolf
Comment: Miguel A. Savastano
6. Capital Flows and the Behavior of Emerging Market Equity Returns
Geert Bekaert and Campbell R. Harvey
III. Capital Flows to
Latin America, Asia, and Eastern Europe
7. Capital Flows, Real Exchange Rates, and Capital Controls: Some Latin American
Experiences
Sebastian Edwards
Comment: José De Gregorio
8. Capital Flows in Asia
Takatoshi Ito
Comment: Dani Rodrik
9. Capital Flows to Central and Eastern Europe and the Former Soviet Union
Stijn Claessens, Daniel Oks, and Rossana Polastri
Comment: Michael P. Dooley
Contributors
Author Index
Subject Index
352 pages