Back to Global Imbalances?

Abstract The 2008-2009 financial crisis has shaken the prevailing equilibrium of the global economy, with a collapse in capital flows and international trade. How will the post-crisis constellation of current account imbalances look? Will the world resume financing the US, and continue sustaining large external imbalances there? Contrary to what many expected, some forces unleashed […]

Whither Latin American Capital Markets?

Back in the early 1990s, economists and policy makers had high expectations about the prospects for domestic capital market development in emerging economies, particularly in Latin America. Unfortunately, they are now faced with disheartening results. Capital markets in Latin America look underdeveloped when considering the many efforts undertaken to improve the macroeconomic environment and to […]

Liquidity Crises: The Functioning of Secondary Markets

As conventional wisdom has it, markets stall during financial crises, as sellers struggle to find their buyers. For example, describing the current subprime lending crisis, Paul Krugman notes “…[M]arkets in stuff that is normally traded all the time … have shut down because there are no buyers” (The New York Times, Aug. 11, 2007). Many […]