Suchergebnisse

In contrast to most traditional approaches, this one recognizes that fixed rates can be and often are adjusted, but argues, that policy makers incur a political cost from devaluation. At the same time, flexible exchange rates may be very volatile, with persistent misalignment. A stylized model of regime choice is developed. The paper cautions against attributing differences in economic growth between groups of Latin American and Caribbean countries to their exchange regime. (DSE/DÜI)

It seems increasingly evident that the problems of the financial crisis in Asia were caused by a variety of different factors, the importance of which varied from country to country. However, according to the authors two points must be emphasized. First, the rapid movement toward capital account convertibility put severe strains on relatively unsophisticated financial systems that had previously focused on simple bank intermediation of funds between savers and investors. Second, governments were surprisingly unprepared to respond to pressures on their currencies.