Financial Markets Volatility and Performance in Emerging Markets

Financial Markets Volatility and Performance in Emerging Markets

Author: Sebastian Edwards

Publisher: University of Chicago Press

Published: 2008-09-15

Total Pages: 299

ISBN-13: 0226185044

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Capital mobility is a double-edged sword for emerging economies, as governments must weigh the benefits of investment against the potential economic costs and political consequences of currency crises, devaluations, and instability. Financial Markets Volatility and Performance in Emerging Markets addresses the delicate balance between capital mobility and capital controls as developing countries navigate the convoluted global network of private investors, hedge funds, large corporations, and international institutions such as the International Monetary Fund. A group of experts here examine rapidly globalizing financial markets with regard to capital flows and crises, domestic credit, international financial integration, and economic policy. Featuring detailed analyses and cross-national comparisons of countries such as Brazil, Argentina, Uruguay, and Korea, this book will shape economists’ and policymakers’ understanding of the effectiveness of restrictions on capital mobility in the world’s most fragile economies.


Book Synopsis Financial Markets Volatility and Performance in Emerging Markets by : Sebastian Edwards

Download or read book Financial Markets Volatility and Performance in Emerging Markets written by Sebastian Edwards and published by University of Chicago Press. This book was released on 2008-09-15 with total page 299 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital mobility is a double-edged sword for emerging economies, as governments must weigh the benefits of investment against the potential economic costs and political consequences of currency crises, devaluations, and instability. Financial Markets Volatility and Performance in Emerging Markets addresses the delicate balance between capital mobility and capital controls as developing countries navigate the convoluted global network of private investors, hedge funds, large corporations, and international institutions such as the International Monetary Fund. A group of experts here examine rapidly globalizing financial markets with regard to capital flows and crises, domestic credit, international financial integration, and economic policy. Featuring detailed analyses and cross-national comparisons of countries such as Brazil, Argentina, Uruguay, and Korea, this book will shape economists’ and policymakers’ understanding of the effectiveness of restrictions on capital mobility in the world’s most fragile economies.

Emerging Economy Business Cycles

Emerging Economy Business Cycles

Author: Rudrani Bhattacharya

Publisher: International Monetary Fund

Published: 2013-05-22

Total Pages: 26

ISBN-13: 1484354605

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This paper analyses the extent to which financial integration impacts the manner in which terms of trade affect business cycles in emerging economies. Using a s mall open economy model, we show that as capital account openness increases in an economy that faces trade shocks, business cycle volatility reduces. For an economy with limited financial openness, and a relatively open trade account, a model with exogenous terms of trade shocks is able to replicate the features of the business cycle.


Book Synopsis Emerging Economy Business Cycles by : Rudrani Bhattacharya

Download or read book Emerging Economy Business Cycles written by Rudrani Bhattacharya and published by International Monetary Fund. This book was released on 2013-05-22 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the extent to which financial integration impacts the manner in which terms of trade affect business cycles in emerging economies. Using a s mall open economy model, we show that as capital account openness increases in an economy that faces trade shocks, business cycle volatility reduces. For an economy with limited financial openness, and a relatively open trade account, a model with exogenous terms of trade shocks is able to replicate the features of the business cycle.

Volatility and Openness of Emerging Markets

Volatility and Openness of Emerging Markets

Author: Vincent J. Hooper

Publisher:

Published: 2008

Total Pages: 15

ISBN-13:

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This paper provides some empirical evidence on the relationship between the volatility and quot;opennessquot; of emerging stock markets (ESMs). The primary null hypothesis of this research is that volatility is not correlated with openness. The study uses a factor analysis to condense the number of quot;opennessquot; attributes to a smaller number of dimensions. Volatility, as measured by the standard deviation of returns on the emerging stock market indices over an ex post five year period is regressed against the factors. The findings of this research indicate that the volatility of emerging markets is positively correlated with the degree of openness. The results have relevant policy implications for both governments of developing countries who should be aware of the relationship between volatility and openness, and the international investor.


Book Synopsis Volatility and Openness of Emerging Markets by : Vincent J. Hooper

Download or read book Volatility and Openness of Emerging Markets written by Vincent J. Hooper and published by . This book was released on 2008 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides some empirical evidence on the relationship between the volatility and quot;opennessquot; of emerging stock markets (ESMs). The primary null hypothesis of this research is that volatility is not correlated with openness. The study uses a factor analysis to condense the number of quot;opennessquot; attributes to a smaller number of dimensions. Volatility, as measured by the standard deviation of returns on the emerging stock market indices over an ex post five year period is regressed against the factors. The findings of this research indicate that the volatility of emerging markets is positively correlated with the degree of openness. The results have relevant policy implications for both governments of developing countries who should be aware of the relationship between volatility and openness, and the international investor.

Financial Openness and Capital Inflows to Emerging Markets: In Search of Robust Evidence

Financial Openness and Capital Inflows to Emerging Markets: In Search of Robust Evidence

Author: Diego A. Cerdeiro

Publisher: International Monetary Fund

Published: 2019-09-13

Total Pages: 32

ISBN-13: 1513509837

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We reassess the connection between capital account openness and capital flows in an empirical framework that is grounded in theory and makes use of previously unexplored variation in the data. We demonstrate how our theory-consistent regressions may overcome some ubiquitous measurement problems in the literature by relying on interaction terms between financial openness and traditional push-pull factors. Within our proposed framework, we ask: what can be said robustly about the effect of capital account restrictions on capital flows? Our results warrant against over-interpreting the existing cross-country evidence as we find very few robust relationships between capital account restrictiveness and various types of capital inflows. Countries with a higher degree of financial openness are more susceptible to some, but by no means all, push and pull factors. Overall, the results are still consistent with a complex set of tradeoffs faced by policymakers, where the ability to shield the domestic economy from volatile capital flow cycles must be weighed against the sources of exogenous risks and potential long run growth effects.


Book Synopsis Financial Openness and Capital Inflows to Emerging Markets: In Search of Robust Evidence by : Diego A. Cerdeiro

Download or read book Financial Openness and Capital Inflows to Emerging Markets: In Search of Robust Evidence written by Diego A. Cerdeiro and published by International Monetary Fund. This book was released on 2019-09-13 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: We reassess the connection between capital account openness and capital flows in an empirical framework that is grounded in theory and makes use of previously unexplored variation in the data. We demonstrate how our theory-consistent regressions may overcome some ubiquitous measurement problems in the literature by relying on interaction terms between financial openness and traditional push-pull factors. Within our proposed framework, we ask: what can be said robustly about the effect of capital account restrictions on capital flows? Our results warrant against over-interpreting the existing cross-country evidence as we find very few robust relationships between capital account restrictiveness and various types of capital inflows. Countries with a higher degree of financial openness are more susceptible to some, but by no means all, push and pull factors. Overall, the results are still consistent with a complex set of tradeoffs faced by policymakers, where the ability to shield the domestic economy from volatile capital flow cycles must be weighed against the sources of exogenous risks and potential long run growth effects.

Managing Openness

Managing Openness

Author: Mona Haddad

Publisher: World Bank Publications

Published: 2011

Total Pages: 352

ISBN-13: 0821386336

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The global financial crisis triggered a broad reassessment of economic integration policies in developed and developing countries worldwide. The crisis-induced collapse in trade was the sharpest ever since World War II, affecting all countries and all product categories. A huge shock to the trading system, combined with severe macroeconomic instability, makes it natural for policymakers to call into question the basic underlying assumptions of trade liberalization and openness. In particular, outward-oriented or export-led growth strategies are being reassessed as openness is increasingly associated with greater volatility. However, it is crucial not to lose sight of the dynamic benefits that openness can offer. Examples include technology transfer, increased competitive pressure that reduces markups and improves efficiency, and economies of scale. The real question is how to manage outward-oriented strategies so as to maximize the benefits of openness while minimizing risks. This book aims to contribute to this important and ongoing policy debate, bringing together recent empirical work on the trade collapse, its causes and consequences, and the broader trade policy agenda in the post-crisis environment. It addresses critical policy issues revolving around the topic of outward-oriented growth strategy, including policy instruments that help manage risks associated with outward-orientation, lessons learned from the crisis for particular countries and regions, and how emerging trade policy issues such as climate change, commodities, global production networking, and migration affect the prospects for recovery and outward-oriented growth.


Book Synopsis Managing Openness by : Mona Haddad

Download or read book Managing Openness written by Mona Haddad and published by World Bank Publications. This book was released on 2011 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global financial crisis triggered a broad reassessment of economic integration policies in developed and developing countries worldwide. The crisis-induced collapse in trade was the sharpest ever since World War II, affecting all countries and all product categories. A huge shock to the trading system, combined with severe macroeconomic instability, makes it natural for policymakers to call into question the basic underlying assumptions of trade liberalization and openness. In particular, outward-oriented or export-led growth strategies are being reassessed as openness is increasingly associated with greater volatility. However, it is crucial not to lose sight of the dynamic benefits that openness can offer. Examples include technology transfer, increased competitive pressure that reduces markups and improves efficiency, and economies of scale. The real question is how to manage outward-oriented strategies so as to maximize the benefits of openness while minimizing risks. This book aims to contribute to this important and ongoing policy debate, bringing together recent empirical work on the trade collapse, its causes and consequences, and the broader trade policy agenda in the post-crisis environment. It addresses critical policy issues revolving around the topic of outward-oriented growth strategy, including policy instruments that help manage risks associated with outward-orientation, lessons learned from the crisis for particular countries and regions, and how emerging trade policy issues such as climate change, commodities, global production networking, and migration affect the prospects for recovery and outward-oriented growth.

Volatility and Openness of Emerging Markets

Volatility and Openness of Emerging Markets

Author: Vince Hooper

Publisher:

Published: 1996

Total Pages: 24

ISBN-13:

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Book Synopsis Volatility and Openness of Emerging Markets by : Vince Hooper

Download or read book Volatility and Openness of Emerging Markets written by Vince Hooper and published by . This book was released on 1996 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Volatility of Capital Flows in Emerging Markets

The Volatility of Capital Flows in Emerging Markets

Author: Maria Sole Pagliari

Publisher: International Monetary Fund

Published: 2017-03-07

Total Pages: 58

ISBN-13: 147558525X

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Capital flow volatility is a concern for macroeconomic and financial stability. Nonetheless, literature is scarce in this topic. Our paper sheds light on this issue in two dimensions. First, using quarterly data for 65 countries over the period 1970Q1-2016Q1, we construct three measures of volatility, for total capital flows and key instruments. Second, we perform panel regressions to understand the determinants of volatility. The measures show that the volatility of all instruments is prone to bouts, rising sharply during global shocks like the taper tantrum episode. Capital flow volatility thus remains a challenge for policy makers. The regression results suggest that push factors can be more important than pull factors in explaining volatility, illustrating that the characteristics of volatility can be different from those of the flows levels.


Book Synopsis The Volatility of Capital Flows in Emerging Markets by : Maria Sole Pagliari

Download or read book The Volatility of Capital Flows in Emerging Markets written by Maria Sole Pagliari and published by International Monetary Fund. This book was released on 2017-03-07 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital flow volatility is a concern for macroeconomic and financial stability. Nonetheless, literature is scarce in this topic. Our paper sheds light on this issue in two dimensions. First, using quarterly data for 65 countries over the period 1970Q1-2016Q1, we construct three measures of volatility, for total capital flows and key instruments. Second, we perform panel regressions to understand the determinants of volatility. The measures show that the volatility of all instruments is prone to bouts, rising sharply during global shocks like the taper tantrum episode. Capital flow volatility thus remains a challenge for policy makers. The regression results suggest that push factors can be more important than pull factors in explaining volatility, illustrating that the characteristics of volatility can be different from those of the flows levels.

Financial Integration and Macroeconomic Volatility

Financial Integration and Macroeconomic Volatility

Author: Mr.Ayhan Kose

Publisher: International Monetary Fund

Published: 2003-03-01

Total Pages: 29

ISBN-13: 1451846991

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This paper examines the impact of international financial integration on macroeconomic volatility in a large group of industrial and developing economies over the period 1960-99. We report two major results: First, while the volatility of output growth has, on average, declined in the 1990s relative to the three preceding decades, we also document that, on average, the volatility of consumption growth relative to that of income growth has increased for more financially integrated developing economies in the 1990s. Second, increasing financial openness is associated with rising relative volatility of consumption, but only up to a certain threshold. The benefits of financial integration in terms of improved risk-sharing and consumption-smoothing possibilities appear to accrue only beyond this threshold.


Book Synopsis Financial Integration and Macroeconomic Volatility by : Mr.Ayhan Kose

Download or read book Financial Integration and Macroeconomic Volatility written by Mr.Ayhan Kose and published by International Monetary Fund. This book was released on 2003-03-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of international financial integration on macroeconomic volatility in a large group of industrial and developing economies over the period 1960-99. We report two major results: First, while the volatility of output growth has, on average, declined in the 1990s relative to the three preceding decades, we also document that, on average, the volatility of consumption growth relative to that of income growth has increased for more financially integrated developing economies in the 1990s. Second, increasing financial openness is associated with rising relative volatility of consumption, but only up to a certain threshold. The benefits of financial integration in terms of improved risk-sharing and consumption-smoothing possibilities appear to accrue only beyond this threshold.

Soft Power and Exchange Rate Volatility

Soft Power and Exchange Rate Volatility

Author: Mr.Serhan Cevik

Publisher: International Monetary Fund

Published: 2015-03-20

Total Pages: 35

ISBN-13: 1475546645

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Standard models—based exclusively on macro-financial variables—have made little progress in explaining the behavior of exchange rates. In this paper, we introduce a neglected set of “soft power” factors capturing a country’s demographic, institutional, political and social underpinnings to uncover the “missing” determinants of exchange rate volatility over time and across countries. Based on a balanced panel dataset comprising 115 countries during the period 1996–2011, the empirical results are generally robust across different estimation methodologies and show a high degree of persistence in exchange rate volatility, especially in emerging market economies. After controlling for standard macroeconomic factors, we find that the “soft power” variables—such as an index of voice and accountability, life expectancy, educational attainment, the z-score of banks, and the share of agriculture relative to services—have a statistically significant influence on the level of exchange rate volatility across countries.


Book Synopsis Soft Power and Exchange Rate Volatility by : Mr.Serhan Cevik

Download or read book Soft Power and Exchange Rate Volatility written by Mr.Serhan Cevik and published by International Monetary Fund. This book was released on 2015-03-20 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Standard models—based exclusively on macro-financial variables—have made little progress in explaining the behavior of exchange rates. In this paper, we introduce a neglected set of “soft power” factors capturing a country’s demographic, institutional, political and social underpinnings to uncover the “missing” determinants of exchange rate volatility over time and across countries. Based on a balanced panel dataset comprising 115 countries during the period 1996–2011, the empirical results are generally robust across different estimation methodologies and show a high degree of persistence in exchange rate volatility, especially in emerging market economies. After controlling for standard macroeconomic factors, we find that the “soft power” variables—such as an index of voice and accountability, life expectancy, educational attainment, the z-score of banks, and the share of agriculture relative to services—have a statistically significant influence on the level of exchange rate volatility across countries.

Does Openness Imply Greater Exposure?

Does Openness Imply Greater Exposure?

Author: César Calderón

Publisher: World Bank Publications

Published: 2005

Total Pages: 44

ISBN-13:

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External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth and volatility effects of outcome measures of trade and financial integration, as well as four types of foreign shocks: terms of trade changes, trading partners' growth rates, international real interest rate changes, and net regional capital inflows. The paper analyzes the possibility of nonlinearities by allowing the growth and volatility effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks depend on the degree of trade and financial integration. The findings point toward strong non-monotonic effects of openness and external shocks on growth and volatility. Moreover, all in all, the results contradict the view that international integration increases external vulnerability by hurting growth and increasing volatility or by amplifying the adverse effect of external shocks.


Book Synopsis Does Openness Imply Greater Exposure? by : César Calderón

Download or read book Does Openness Imply Greater Exposure? written by César Calderón and published by World Bank Publications. This book was released on 2005 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: External exposure can be measured by the sensitivity of first and second moments of economic growth to openness and foreign shocks. This paper provides an empirical evaluation of external exposure using panel data methods for a worldwide sample of countries. Controlling for domestic conditions, the paper examines the growth and volatility effects of outcome measures of trade and financial integration, as well as four types of foreign shocks: terms of trade changes, trading partners' growth rates, international real interest rate changes, and net regional capital inflows. The paper analyzes the possibility of nonlinearities by allowing the growth and volatility effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks depend on the degree of trade and financial integration. The findings point toward strong non-monotonic effects of openness and external shocks on growth and volatility. Moreover, all in all, the results contradict the view that international integration increases external vulnerability by hurting growth and increasing volatility or by amplifying the adverse effect of external shocks.