What Macroeconomic Conditions Best Explain Southeast Asian Capital Flows?

The paper examines the capital flows of seven Southeast Asian emerging economies over the last decade and a half. It first evaluates the role of economic conditions within a country itself, including the country's domestic financial conditions and the openness of its financial markets to international capital flows. Then, the role of the counties' own domestic conditions is compared with regional influences and with the importance of macroeconomic conditions elsewhere, such as in Europe, and in the largest single recipient of the outflows, the United States. Key results include: (1) domestic capital market conditions are the best predictors (among the variables that we examine) of the capital flows of these countries; (2) capital market openness is of little use in predicting changes in capital flows; and, (3) while the macroeconomic conditions of the United States are strong predictors of subsequent GDP growth in the region, they are not, by themselves, good predictors of the region's capital flows.Global Imbalances, Financial Market Capitalization, Productivity

Once Bitten: The Effect of IMF Programs on Subsequent Reserve Behaviour

Traditional models have encountered problems in explaining the ac- cumulation of international reserves, particularly in Asia, in the period since the late 1990s. One suggestion has been that countries have sought to self insure against future crises, either because of a perceived increase in the cost of crises or because of the perceived conditionality costs of using IMF credits. This paper others an empirical investigation of these ideas, disaggregating across regions and across IMF facilities. Using both static and dynamic regression techniques we find that IMF pro- grams have had a significant positive effect on subsequent reserve accu- mulation, allowing for other determinants, and that this effect endures over time. We also find that the effect differs between Latin America and Asia, and that it is not simply a phenomenon that is associated with the Asian crisis of 1997/98. The paper goes on to discuss the implications for the design of policy and for the reform of the IMF.International Reserves, IMF

Revisiting Mrs. Machlup's Wardrobe: The Accumulation of International Reserves, 1992-2001

international reserves

Foreign Exchange Pressures in Latin America: Does Debt Matter?

Latin American countries have been in the eye of economic and ¯nancial storms several times in recent years. Advice from the International Monetary Fund has consistently highlighted the need for sound fiscal policies and lower debt levels. But is public debt relevant? Following a brief discussion of the theoretical issues involved, this paper examines empirically the relationship between public indebtedness and pressures in the foreign exchange market. Alternative measures are used to capture the latter and the analysis controls for a de facto classi¯cation of exchange rate regimes. Estimations of static and dynamic panels for 28 Latin American and Caribbean (LAC) countries report substantial fiscal effects.currency crises, public debt, latin america

A screen for iron metabolism genes that influence circadian rhythms implicates Ferritin 2 Light Chain Homologue in the Drosophila clock

PhDHeme has been previously implicated in the function of the mammalian circadian clock but there has been no systematic investigation into the interplay between iron homeostasis and circadian rhythms. I have addressed this question in the model organism Drosophila melanogaster using two different approaches. First, I measured the amount and iron content of the iron storage protein ferritin, the activity of the iron sulfur cluster-containing enzyme aconitase and total heme content in whole bodies of Drosophila at different times during the 24-hour day-night cycle. I found no apparent fluctuation in these assays that would suggest circadian regulation of iron metabolism. Second, I tested whether RNA interference (RNAi) of iron homeostasis genes would alter the circadian behaviour of the flies. I selected 48 genes related to iron metabolism, silenced their expression specifically in cells expressing the circadian time-keeping transcription factor timeless and monitored the ability of these flies to sustain circadian rhythms in the absence of light cues. I found that when one of the two ferritin subunits, Ferritin 2 Light Chain Homologue (Fer2LCH) was silenced in clock cells the resulting flies displayed disrupted circadian rhythms in constant darkness. Expression of the circadian clock transcription factors timeless and period was disrupted in Fer2LCHRNAi flies. Inducing RNAi in restricted subsets of neurons I observed defects when Fer2LCH expression was reduced in the small ventral lateral neurons and in the dorsal lateral neurons that express the photoreceptor cryptochrome. An enhancer trap in Fer2LCH showed expression in a subset of these neurons. I propose a new role for Fer2LCH in the function of the biological clock in Drosophila melanogaster

Foreign exchange markets in south-east Asia 1990-2004: An empirical analysis of spillovers during crisis and non-crisis periods

The East Asian crisis of 1997 sparked an extensive literature in an effort to explain the causes and spread of heightened foreign exchange (FX) market pressures in the region. In this paper we model FX movements and calculate spillover effects covering the extended period between 1990 and 2004. Using Markov switching vector autoregressions, we find substantial evidence that FX correlations vary across crisis and non-crisis states, a result that bears implications for international portfolio diversification and reserve pooling. Contagion effects are also present during crises. Finally, we gauge the ability of stock market indices to forecast time-varying transition probabilities and discover positive resultsEast Asia, Currency Crisis

What Determines the Implementation of IMF Programs?

For many years analysis of IMF conditionality overlooked the extent to which it was implemented. However, more recently increasing attention has been paid to implementation. Theoretical contributions have focused on the importance of special interest groups, but empirical evidence has failed to provide compelling support for the theory. Indeed, empirical studies have reported mixed results that sometimes seem to be conflicting. This paper identifies a range of economic, political and institutional factors that may, in principle, influence implementation. Using various measures of implementation, it then tests an econometric model designed to capture these influences over 1992-2004 exploiting improved sources of data. The results suggest that significant determinants of implementation are trade openness, the existence of veto players and the amount of resources committed by the Fund. The paper offers an interpretation of the results and discusses the implications for policy.IMF, Implementation

Public Debt Maturity and Currency Crises

This paper provides a theoretical and empirical examination of the e®ect of debt structure on the probability of a currency crisis and the slope of the yield curve. We employ an open-economy version of the Barro-Gordon model with public debt, as in Benigno and Missale (2004) and generalize the analysis to allow for the case where the monetary authority can fully commit itself to an escape clause monetary rule. Comparing the latter with the discretionary outcomes motivates the asymmetric information game where the signalling e®ect of defending the parity competes with the fundamentals of the debt burden. Two key predictions of the model are tested with positive results.Currency crisis, debt management

Is There a Beijing Consensus on International Macroeconomic Policy

Some commentators have claimed that there is a growing Beijing Consensus among emerging and developing economies concerning the merits of ChinaÕs economic policies. Within an analytical framework provided by the well known international trilemma, this paper investigates the empirical evidence concerning this claim with specific reference to the adoption of international macroeconomic policies. We document ChinaÕs high degree of exchange rate stability and monetary independence and low degree of financial openness. We then find that there are substantial differences between what China does and what is done in other emerging and developing economies. While we discover some regional and inter-temporal variations, there seems to be little or no support for the existence of a Beijing Consensus on international macroeconomic pol- icy. The proximity of ChinaÕs policies to those in the rest of the developing world may increase in the future; but this is may reflect changes in China rather than elsewhere.Trilemma, China

Trilemma Stability and International Macroeconomic Archetypes in Developing Economies

In this paper, we examine the stability of international macroeconomic policies of developing countries in the post-Bretton Woods period. We use the simple geometry of the classic, open-economy trilemma to construct a new, univariate measure of inter- national macroeconomic policy stability, and to characterize international macroeconomic arrangements in terms of their semblance to definitive policy archetypes; and, we use the trilemma constraint to provide a new gauge of monetary sovereignty. Using these measures, we find that the greatest international macroeconomic stability among developing economies exists where there are capital controls and limited exchange rate flexibility. The least stable policies occur in the economies with flexible exchange rates and open financial markets. We also find that official holdings of foreign exchange re- serves seem to be weakly linked to greater policy stability, and their link is further weakened where financial markets are open.Trilemma, Foreign Exchange Rate Regimes, International Reserves, Financial Openness, Fear of Floating, Monetary Sovereignty