Globalization, Crisis Contagion and the Reform of the International Financial Architecture

Karunaratne, Neil Dias (2002) Globalization, Crisis Contagion and the Reform of the International Financial Architecture. Discussion Paper No 300, School of Economics, The University of Queensland.

Attached Files (Some files may be inaccessible until you login with your UQ eSpace credentials)
Name Description MIMEType Size Downloads
DP300Jan02.pdf DP300Jan02.pdf application/pdf 205.96KB 3376
Author Karunaratne, Neil Dias
Title Globalization, Crisis Contagion and the Reform of the International Financial Architecture
School, Department or Centre School of Economics
Institution The University of Queensland
Open Access Status Other
Report Number Discussion Paper No 300
Publication date 2002-01-01
Start page 1
End page 20
Total pages 20
Publisher The University of Queensland
Language eng
Subject 340206 International Economics and International Finance
Abstract/Summary The process of globalization has integrated financial markets and cross-border capital flows. This has resulted in the hyper mobility of capital and increased the vulnerability of nations to speculative attacks on their currencies. Capital flows deliver benefits in a first-best world. However, in a second-best world capital controls can reduce the welfare losses due to information asymmetry and other distortions. The speed and sequencing of capital account liberalization are critical to minimize the exposure of an economy to currency crises. Various types of currency crises and resulting contagion and its regional nature have been reviewed. Crisis contagion poses a systemic threat to the stability of the global financial system. Therefore the reform of the international financial architecture in order to minimize the occurrence of crises and crises contagion is matter of utmost importance. The role of the key players in the arena of global capital flows and the proposals for redesigning the international financial architecture are critically reviewed.
Keyword globalization
financial integration
speculative attacks
crisis contagion
convertibility of the capital account
reform of the international financial architecture
References Bhattacharaya, A. and Miller, M. (1999) 'Coping with crises: Is there a 'silver bullet'' ? The Asian Financial Crisis. Causes, Contagion and Consequendces. Cambridge University Press: 357-381. Calvo, G.A. and Mendoza, E.G. (1998) 'Contagion, Globalization and the Mobility of Capital Flows'. Center of International Economics (unpublished paper). University of Maryland. Cooper, R. N. (1998) 'Should capital account convertibility be a world objective'. In Should the IMF Pursue Capital Account Convertiblity ?, Essays in International Finance. No. 207 ets. S. Fischer et al. Princeton University, Princeton. Diamond, D. and Dybvig (1983) 'Bank Runs, Deposit Insurance, and Liquidity', Journal of Political Economy, 91: 401-19. Dooley, M.P. (1996) ' A Survey of the Literature on Controls over International Capital Transactions'. International Monetary Fund Staff Papers. 43: 639-87. Economics in Honour of Joseph Schumpeter 1972. Princeton. Princeton University Press.World Bank (1993) : The East Asian Miracle: Economic Growth and Public Policy. World Bank Policy Research Report. Oxford University Press. Oxford. Edwards, S. (1998) 'Abolish the IMF' Financial Times ( 13 December) Eichengreen, B.,et al. (1998) Capital Account Liberalization: Theoretical and Practical Aspects. Occasional Paper 172. IMF. Washington. Fischer, S. (1999) 'Reforming the International Financial System' , The Economic Journal 109 (November): F557-567 Flood, R. P. and Marion, N.P. (1999) Perspective on Recent Currency Crisis Literature' International Journal of Finance and Economics, 4: 1-26. Frankel, J. (1996) 'HowWell Do Markets Work ? Might a Tobin Tax Help'. in M. ul Haque, I. Kaul and I. Gruenberg (eds.) The Tobin Tax: Coping with Fiancial Volatility. Oxford University Press, Oxford: 61-81. Glick, R. and Rose, A. (1998) 'Contagion and Trade: Why Currency Crises are Regional?' NBER Working Paper, 6806. Goldstein, M. (1998) 'The Asian Financial Crises: Causes, Cures and Systemic Implications', Policy Analyses in Internatinal Economics, 55, Institute of International Economics. Washington. DC. IMF (2000) Globalization: Threat or Opportunity ? IMF (2000) International Monetary Fund. Report of the Acting Managing Director to the International Monetary and Financial Committee on Progress in Reforming the IMF and Strengthening the Architecture of the International Financial System. Isard, P. ( 1995) Exchange Rate Economics. Cambridge University Press. Cambridge.Krugman, P. (1979) 'A Model of Balance-of Payments Crises', Journal of Money, Credit and Banking, 11: 311-25. Krugman, P. (1998) 'Saving Asia: It's Time to get Radical', Fortune Investor /1998/9809077sol.html:33-38. Little, I.M.D. (1982) Economic Development, Theory, Policy and International Relations. Basic Books Inc. New York: 70 Masson, P. (1998) 'Contagion, Monsoonal Effects, Spillovers, and Jumps Between Multiple Equilibria,' Working Paper 98/142. IMF. Washington. McKinnon, R. (1982) :The Order of Economic Liberalization: Lessons from Chile and Argentina'. In K. Brunner and A. Meltzer (eds.) Economic Policy in a World of Change. Carnegie-Rochester Conference Series on Public Policy. North-Holland. Amsterdam: 159-71. Obstfeld, M. (1986) 'Rational and Self-fulfilling Balance-of-Payuments Crisies', American Economic Review, 76: 72-81. Obstfeld, M. (1996) ' Models of Currency Crisis with Self-Fulfilling Features', European Economic Review, 40: 1037-48. Radlet, S. and Sachs, J. (1998) 'The East Asian Financial Crisis: Diagnosis, Remedies and Prospects'. Brookings Papers on Economic Activity, 1:1-96 Sachs, J.A. , Tornell, A. and Velasco, A. (1996) 'Financial Crises in Emerging Markets: The Lessons from 1995', Brookings Papers on Economic Activity, 1: 147-217. Solow, R. M. (1956) ' A Contribution to the Theory of Economic Growth'. Quarterly Journal of Economics (February): 65-94. Soros, G. (1997) The Crisis of Global Capitalism. BBS. NewYork. Stiglitz, J. E. (1999) The World Bank at the Millenium',The Economic Journal 109(November):F577-597. Tobin, J. (1974) 'The New Economics One Decade Older', The Eliot Janeway Lecture on Historical Economics in Honour of Joseph Schumpeter 1972. Princeton University Press. Tobin, J. (1978) 'A Proposal for International Monetary Reform'. Eastern Economic Journal. Vol.4:153-9.
Additional Notes ISSN 1033-4661

Document type: Department Technical Report
Collection: Discussion Papers (School of Economics)
Version Filter Type
Citation counts: Google Scholar Search Google Scholar
Created: Thu, 05 Feb 2004, 10:00:00 EST