NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Managing Financial Globalization: Insights from the Recent Literature

Shang-Jin Wei

NBER Working Paper No. 24330
Issued in February 2018
NBER Program(s):Development Economics Program, International Finance and Macroeconomics Program

This paper seeks to draw lessons for developing countries based on a survey of the recent literature on financial globalization. First, while capital account openness holds promises (by potentially lowering cost of capital, promoting risk sharing, and providing disciplines on policies), it does not always work out that way in the data. Distortions in the domestic financial market, international capital market, domestic labor market, and domestic public governance can all make financial globalization less beneficial for developing countries. Second, developing countries may seek to avoid the effects of foreign monetary policy shocks. The empirical pattern appears to be somewhere between a trilemma and a dilemma. While nominal exchange rate flexibility provides some policy autonomy but not consistently, capital flow management can confer additional insulation against foreign monetary shocks.

download in pdf format
   (384 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24330

Users who downloaded this paper also downloaded* these:
Auclert and Rognlie w24280 Inequality and Aggregate Demand
Gertler, Kiyotaki, and Prestipino w24126 A Macroeconomic Model with Financial Panics
Bryan, Choi, and Karlan w24278 Randomizing Religion: The Impact of Protestant Evangelism on Economic Outcomes
Mian and Sufi w24322 Finance and Business Cycles: The Credit-Driven Household Demand Channel
Hu, Pan, and Wang w24346 Chinese Capital Market: An Empirical Overview
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us