Abstract

Unlike in the cases of most IMF-supported programs, pre-crisis vulnerabilities in capital account crisis countries reflected various stock disequilibria and structural weaknesses more than purely macroeconomic imbalances. The crises were manifested in sharp exchange rate movements and massive capital outflows, far in excess of initial imbalances. The focus of program design, and of macroeconomic and structural policies, therefore, was on restoring confidence, to stem and reverse capital outflows.

Unlike in the cases of most IMF-supported programs, pre-crisis vulnerabilities in capital account crisis countries reflected various stock disequilibria and structural weaknesses more than purely macroeconomic imbalances. The crises were manifested in sharp exchange rate movements and massive capital outflows, far in excess of initial imbalances. The focus of program design, and of macroeconomic and structural policies, therefore, was on restoring confidence, to stem and reverse capital outflows.

Pre-Crisis Conditions and Emergence of the Crisis

Pre-program conditions in capital account crisis countries differed in important respects from those prevailing in most other countries that adopted IMF-supported standby and Extended Fund Facility (EFF) arrangements in the past decade. For one thing, with the exception of Turkey (1994), which suffered from erratic growth and high inflation, most traditional macroeconomic indicators were, on average, more favorable: fiscal imbalances were smaller, inflation was lower, and growth was stronger (see Table 2.1).

Table 2.1.

Selected Macroeconomic Indicators for Capital Account Crisis Countries

article image
Source: IMF, World Economic Outlook.

See Appendix I for sample definitions.

Sample median.

Current account deficits prior to the crises were substantial but they were the counterpart of large private capital inflows that in most cases had been sustained for years. Although current account deficits were, to varying degrees, an ingredient of the crisis in all countries, these deficits in and of themselves do not explain the abruptness and magnitude of the reversals of capital flows. In some countries, notably Mexico and Thailand, current account deficits were very large, but overall external debt was manageable and solvency was not a concern.3 Although the capital inflows registered in the precrisis years could not necessarily be expected to persist, the magnitude of these flows gave little warning that the adjustment in the capital account would be as sudden and severe as that which eventually took place. Nor did the appreciation of the real effective exchange rate, experienced in varying degrees in most countries in the years prior to the crises, foreshadow the sudden sharp depreciations, with significant overshooting, that occurred (Figure 2.1). In fact, in the majority of the countries considered, the crisis intensified after the initial exchange rate adjustment. In the absence of other vulnerabilities, current account adjustment and a correction of the real exchange rate could have been achieved in a more orderly fashion, although perhaps not without some temporary turbulence.4

Figure 2.1.
Figure 2.1.

Exchange Rate Movements in Capital Account Crisis Countries

Sources: IMF, Information Notice System; and IMF staff estimates.

The large capital outflows were thus less the underlying cause of the crises than their manifestation. The underlying vulnerabilities primarily reflected stock imbalances—high levels of public debt, maturity or currency mismatches in the structure of private sector liabilities, or highly leveraged positions 5—and the correction of these imbalances would likely have entailed at least some macroeconomic disruption, even in the absence of the very large capital outflows that eventually transpired. The precise propagation mechanism between these stock imbalances and the currency crises varied across countries. As many “second-generation” crisis models would suggest, however, the market’s perception that the authorities might be reluctant to raise interest rates—in some cases because of vulnerabilities in the corporate and financial sectors, in others because of the adverse impact on public debt dynamics—may have been an important factor that helped trigger self-fulfilling runs on the currency.

The fact that the vulnerabilities were mainly related to stock imbalances, rather than traditional flow disequilibria, complicated the macroeconomic policy response and created an environment in which it became rational for investors to run for the exit in response to relatively small changes in information about the fundamentals.6 The sources of these vulnerabilities differed across crises: in the Latin American countries and Turkey, they were primarily rooted in the public sector; in Asia, in the private sector.

The Mexican crisis of 1994–95 demonstrated that such vulnerabilities do not necessarily reflect longstanding imbalances but can build up relatively quickly, particularly when the policy response fails to come to grips with emerging difficulties. Prior to the crisis, in 1992–93, public finances were on a sound footing, with a surplus of the non financial public sector, declining public and external debt ratios, and short-term external debt more than covered by official reserves. In 1994, however, as a combination of domestic political shocks (uncertainty about the election outcome and internal armed conflict), rising international interest rates, and a hesitation to tighten monetary policy had resulted in substantial reserve losses, the government swapped large amounts of peso-denominated treasury bills for U.S. dollar indexed bills both to reduce its funding costs and to underscore its commitment to the exchange rate peg. Although the move reduced interest payments in the short run, it also increased the government’s exposure to exchange rate risk significantly. By early 1995, Mexico was facing an external funding crisis in the wake of the floating of the peso as doubts about the government’s ability to service its maturing obligations led to massive outflows.

In contrast, the crises in Turkey (1994) and Brazil (1998) primarily reflected considerations that were medium-term in nature, related to adverse public sector debt dynamics.7 Although public sector debt ratios were comparable to those in other countries, the legacy of high inflation—ongoing in Turkey and only recently conquered in Brazil—and low policy credibility was reflected in high real interest rates and a correspondingly large burden of this debt on the fiscal accounts; each country ran large and increasing deficits in the run-up to its financial crisis. Moreover, this situation gave rise to an inherent policy dilemma: any monetary accommodation for exchange rate depreciation threatened to accelerate or reignite inflation, but raising interest rates in response to a shift in the capital account could also fuel inflation through “unpleasant monetarist arithmetic,” 8—that is, by aggravating the already heavy debt servicing burden of the public sector.

This dilemma was at the core of Brazil’s vulnerability to contagion in the aftermath of the Asian and Russian financial crises, undermining market confidence in the exchange rate peg despite a comfortable cushion of official reserves (in relation to imports or short-term debt). Temporary interest rate hikes failed to stem capital outflows amid doubts about the government’s ability to achieve a sustained fiscal consolidation. The dilemma continued as the IMF-supported program sought to maintain the exchange rate peg, and was only resolved once structural fiscal reforms gained credence and the peg was replaced by a more credible monetary policy framework.

Argentina, like Brazil, had a history of high inflation, which had been stabilized a few years before the Mexican crisis of 1994–95. In contrast to Brazil, however, its policy credibility was buttressed by a currency board-type arrangement and, with the fiscal position close to balance in 1992–93, public sector debt dynamics were not a concern. Moreover, with external debt accounting for over 70 percent of total public sector debt, the fiscal position was partially insulated from changes in domestic financing conditions. But two weaknesses of these arrangements nevertheless made Argentina especially vulnerable to the effects of the Mexican crisis: reliance on external financing, which made the government dependent on sentiments in international capital markets, and the severely limited ability to absorb bank balance sheet weaknesses that the currency board arrangement imposed on the central bank. These concerns triggered an external funding crisis as the government temporarily lost access to international capital markets amid massive withdrawals of bank deposits and large capital outflows.

Pre-crisis conditions in the Asian program countries differed significantly from those in Latin America and Turkey. These countries had a strong track record of low inflation and fiscal positions that had, on average, been close to balance (Indonesia, Korea, and Philippines) or in surplus (Thailand) and public sector debt ratios that were either very low (Korea and Thailand) or declining steadily (Indonesia and Philippines). The vulnerabilities that exposed these countries to a shift in market sentiment were rooted in the private sector, reflecting both weak financial systems and fragilities in heavily indebted corporate sectors. As in other countries, these vulnerabilities created a serious dilemma for monetary and exchange rate policy.

The weaknesses in the financial systems in Asia are by now well known: financial institutions ill equipped to handle risk; inadequate regulation and supervision; highly leveraged corporate sectors; and substantial unhedged and short-term foreign borrowing—encouraged, in part, by remaining controls on long-term flows (Korea) or special facilities (Thailand) and by the implicit guarantee of a pegged exchange rate.

The proximate trigger of the Asian crisis was a decline in export growth, against the background of weakening demand in partner countries, some real exchange rate appreciation especially as the U.S. dollar (to which these countries’ currencies were explicitly or implicitly pegged) strengthened against the yen, and a sharp decline in prices for key exports, notably semiconductors, which in varying degrees affected many countries in the region. In Thailand, the resulting drop in exports prompted a reassessment of the sustainability of the country’s large current account deficit and of inflated domestic asset prices. Asset prices began to decline, and the downturn of the economy increasingly exposed the vulnerabilities in the financial sector and led to capital outflows and increasing pressures on the exchange rate.

Contagion from the crisis in Thailand quickly spread throughout the region, affecting, among others, the Philippines, Indonesia, and, eventually, Korea. Like Thailand, these countries hesitated to raise interest rates and initially tried to support the exchange rate through intervention. (Indonesia, however, did attempt an initial hike in interest rates that was later reversed.) As in other countries, this policy failed to solve the flow disequilibrium in the foreign exchange market, while creating (in Indonesia and the Philippines) or severely aggravating (in Korea) imbalances between the stocks of short-term debt and usable reserves. These imbalances provided additional incentives for investors to run for the exit, particularly in Korea. Faced with significant reserve losses, 9 these countries were eventually forced to abandon their implicit or explicit pegs.

Despite differences in the underlying causes of the crises, the broad pattern of balance of payments developments before and during the onset of the crises is strikingly similar in the capital account crisis countries (Figure 2.2). Prior to the crises, private capital inflows averaged 4–6 percent of GDP, matched by current account deficits of similar orders of magnitude (official capital and reserve flows being relatively small). In each of these countries, the initial response to the shift in private capital inflows was to try to maintain the implicit or explicit currency pegs through large-scale intervention and reserve losses. With the exception of Argentina, the pegs were abandoned and the counterpart to private capital outflows was official financing together with current account adjustment. One notable difference between Latin America and Turkey, on the one hand, and the Asian crisis countries, on the other, was the duration of the capital outflows when the crises broke. In Latin America and Turkey, capital outflows tended to be sharper—substantial, but of (relatively) short duration. In East Asia, by contrast, capital outflows lasted for several quarters (and, in some cases, inflows have yet to resume on a sustained basis). Eventually, though usually only after a wrenching macroeconomic adjustment, private capital outflows subsided or were even reversed, allowing for a buildup of reserves. In turn, this pattern of capital flows had profound implications for program design, the need for financing, and the appropriate role of macroeconomic policies.

Figure 2.2.
Figure 2.2.

Balance of Payment Developments

(In percent of quarterly GDP)

Source: IMF, International Financial Statistics.

Implications for Program Design

When the countries turned to the IMF for support, 10 they had already encountered one or several waves of capital outflows. Faced with the dilemma that both sharp increases in interest rates and a depreciation of the exchange rate would likely have serious negative effects, most of these countries had tried to counter the outflows through some form of exchange market intervention, which was largely sterilized. In the process, they had incurred significant reserve losses, which in some cases (Korea, Mexico, and Thailand) had led to a virtual depletion of net reserves, significantly increasing the risk of a full-fledged funding crisis. With the exception of Turkey, all of the countries had some form of exchange rate peg prior to the crisis, 11 but by the time the programs were negotiated only Argentina and Brazil were still maintaining their pegs. (The initial program in Brazil explicitly sought to maintain the peg; however, the rate had to be floated soon after the program was approved.) The other countries had already experienced substantial depreciations of their exchange rates, which generally exceeded pre-crisis estimates of possible overvaluations. These capital outflows, if extrapolated, would require massive shifts in current account balances well beyond what seemed consistent with medium-term sustainability and what would have been considered adequate prior to the crisis.

These circumstances held three key implications for program design. First, in the immediate run, restoring confidence required convincing financing strategies that alleviated concerns about the countries’ ability to meet their maturing obligations. Second, the fundamental thrust of macroeconomic policy had to be directed more at stemming capital outflows than at fostering greater external adjustment (as in traditional programs). Third, restoring confidence required addressing the various vulnerabilities that had prompted the shift in market sentiment in the first place.

As discussed below, none of these desired criteria for program design would be easy to achieve. If programs were successful in restoring confidence, the large official financing would be superfluous. But given uncertainty about market reactions, programs ran the risk that the projections of market turnaround on which they were predicated would turn out to have been overly optimistic. At the same time, assuming the worst case scenario—or heavy-handed attempts at private sector involvement—could undermine confidence further and exacerbate outflows.

On macroeconomic policies, monetary policy faced a dilemma: should policies be tightened to stem outflows, or eased to forestall an excessive weakening of economic activity (or a worsening of the public debt dynamics)? Fiscal policy could play a key part where there were underlying weaknesses in public sector finances. Beyond this, however, fiscal policy’s role was difficult to define because the contribution it could make to external adjustment depended critically on the response of the private sector to the crisis, which was difficult to predict.

Finally, addressing structural vulnerabilities was relatively more straightforward in the countries where these vulnerabilities were primarily rooted in the public sector and where the required policy adjustments fell primarily in the domain of the IMF’s traditional expertise. In contrast, in the countries where the structural vulnerabilities were rooted in the private sector and required extensive structural reforms in the financial system and the corporate sector, the vulnerabilities presented a new set of challenges.

Cited By

  • Agénor, Pierre-Richard, C. John McDermott, and E. Murat Uçer, 1997, “Fiscal Imbalances, Capital Inflows, and the Real Exchange Rate: The Case of Turkey,European Economic Review, Vol. 41 (April), pp. 81925.

    • Search Google Scholar
    • Export Citation
  • Aghion, Philippe, Philippe Bacchetta, and Abhijit Banerjee, 2000, “A Simple Model of Monetary Policy and Currency Crises,European Economic Review, Vol. 44 (May), pp. 72838.

    • Search Google Scholar
    • Export Citation
  • Alesina, Alberto, and Allan Drazen, 1991, “Why Are Stabilizations Delayed?American Economic Review, Vol. 81 (December), pp. 117088.

    • Search Google Scholar
    • Export Citation
  • Basurto, Gabriela, and Atish R. Ghosh, 2000, “The Interest Rate-Exchange Rate Nexus in the Asian Crisis Countries,Staff Papers, Special Issue—IMF Annual Research Conference, International Monetary Fund, Vol. 47, pp. 99120.

    • Search Google Scholar
    • Export Citation
  • Berg, Andrew, 1999, “The Asia Crisis: Causes, Policy Responses, and Outcomes,IMF Working Paper 99/138 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Berg, Andrew, Catherine Pattillo, 1999, “Are Currency Crises Predictable?: A Test,Staff Papers, International Monetary Fund, Vol. 46 (June), pp. 10738.

    • Search Google Scholar
    • Export Citation
  • Blanchard, Olivier J., and Danny Quah, 1989, “The Dynamic Effects of Aggregate Demand and Supply Disturbances,American Economic Review, Vol. 79 (September), pp. 65573.

    • Search Google Scholar
    • Export Citation
  • Boorman, Jack, Timothy Lane, Marianne Schulze-Ghattas, Ales Bulir, Atish R. Ghosh, Javier Hamann, Alex Mourmouras, and Steven Phillips, 2000, “Managing Financial Crisis: The Experience in East Asia,Carnegie–Rochester Conference Series on Public Policy, No. 53 (Amsterdam: North-Holland).

    • Search Google Scholar
    • Export Citation
  • Burnside, Craig, Martin S. Eichenbaum, and Sergio Rebelo, 1999, “Prospective Deficits and the Asian Currency Crisis,Policy Research Working Paper No. 2174 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., 1996, “Varieties of Capital–Market Crises” (unpublished; College Park: University of Maryland). Available via the Internet: http://www.bsos.umd.edu/econ/ciecrp.htm

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., 1999, “Fixed versus Flexible Exchange Rates: Preliminaries of a Turn-of-Millennium Rematch” (unpublished; College Park: University of Maryland). Available via the Internet: http://www.bsos.umd.edu/econ/ciecrp.htm

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A.,, and Enrique G. Mendoza, 1996, “Mexico’s Balance–of–Payments Crisis: A Chronicle of a Death Foretold,Journal of International Economics, Vol. 41 (November), pp. 23564.

    • Search Google Scholar
    • Export Citation
  • Chalk, Nigel A., and Richard Hemming, 2000, “Assessing Fiscal Sustainability in Theory and Practice,IMF Working Paper 00/81 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Chand, Sheetal K., 1992, “Fiscal Impulses and Their Fiscal Impact,IMF Working Paper 92/38 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Chang, Roberto, and Andres Velasco, 1998, “Financial Fragility and the Exchange Rate Regime,NBER Working Paper No. 6469 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Chu, Ke-Young, and Sanjeev Gupta, 1998, eds., Social Safety Nets: Issues and Recent Experiences (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Claessens, Stijn, Simeon Djankov, and Giovanni Ferri, 1998, “Corporate Distress in East Asia: Assessing the Impact of Exchange Rate and Interest Rate Shocks” (unpublished; Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Claessens, Stijn, Simeon Djankov, and Tatiana Nenova, 2000, “Corporate Risk Around the World,Policy Research Working Paper No. 2271 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Cline, William R., 2000, “The Role of the Private Sector in Resolving Financial Crises” (unpublished; Washington: Institute for International Finance).

    • Search Google Scholar
    • Export Citation
  • Corsetti, Giancarlo, Paulo Pesenti, and Nouriel Roubini, 1999, “What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate,Japan and the World Economy, Vol. 11, No. 3, pp. 30573.

    • Search Google Scholar
    • Export Citation
  • Dell’Ariccia, Giovanni, Isabel Gödde, and Jeromin Zettelmeyer, 2000, “Moral Hazard and International Crisis Lending: A Test,paper presented at the first IMF Research Conference, Washington, November.

    • Search Google Scholar
    • Export Citation
  • Dollar, David, and Mary Hallward-Driemeier, 2000, “Crisis, Adjustment, and Reform in Thailand’s Industrial Firms,World Bank Research Observer (International), Vol. 15 (February),No. 1, pp. 122.

    • Search Google Scholar
    • Export Citation
  • Domaç, Ilker, and Giovanni Ferri, 1998, “The Real Impact of Financial Shocks: Evidence from Korea,Policy Research Working Paper No. 2010 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Dornbusch, Rudiger, and Alejandro Werner, 1994, “Mexico: Stabilization, Reform, and No Growth,Brookings Papers on Economic Activity: 1, Brookings Institution, pp. 253315.

    • Search Google Scholar
    • Export Citation
  • Drazen, Allan, and Vittorio Grilli, 1993, “Benefits of Crises for Economic Reforms,American Economic Review, Vol. 83 (June), pp. 598607.

    • Search Google Scholar
    • Export Citation
  • Edwards, Sebastian, 2000, “Contagion,The World Economy, Vol. 23 (July), pp. 873900.

  • Eichengreen, Barry, 1999, “Is Greater Private Sector Burden Sharing Impossible?Finance & Development, Vol. 36 (September), pp. 1619.

    • Search Google Scholar
    • Export Citation
  • Fane, George, and Ross H. McLeod, 1999, “Lessons for Monetary and Banking Policies from the 1997–98 Economic Crises in Indonesia and Thailand,Journal of Asian Economics, Vol. 10 (Fall), No. 3, pp. 39513.

    • Search Google Scholar
    • Export Citation
  • Feldstein, Martin, 1998, “Refocusing the IMF,Foreign Affairs, Vol. 77 (March–April), pp. 2033.

  • Feldstein, Martin, 1999, “A Self–Help Guide for Emerging Markets,Foreign Affairs, Vol. 78 (March–April), pp. 93109.

  • Flood, Robert P., and Nancy P. Marion, 1998, “Perspectives on Currency Crisis Literature,IMF Working Paper 98/130 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey A., 1999, “The Balance Between Adjustment and Financing,paper presented at the International Monetary Fund seminar,Key Issues in Reform of the International Monetary System,Washington, May.

    • Search Google Scholar
    • Export Citation
  • Furman, Jason, and Joseph E. Stiglitz, 1998, “Economic Crises: Evidence and Insights from East Asia,Brookings Papers on Economic Activity: 2, Brookings Institution, pp. 135.

    • Search Google Scholar
    • Export Citation
  • Ghosh, Swati R., and Atish R. Ghosh, 2000, “East Asia in the Aftermath: Was There a Crunch?” in European Monetary Union, Emerging Markets and Econometric Issues in International Finance, ed. by Cornelius, Gottschling, and Kreuter (Frankfurt, Campus Verlag).

    • Search Google Scholar
    • Export Citation
  • Ghosh, Swati R., and Atish R. Ghosh, 2001, “Structural Factors in Currency Crises” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Giavazzi, Francesco, and Marco Pagano, 1990, “Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries,NBER Working Paper No. 3372 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Goldfajn, Ilan, and Taimur Baig, 1998, “Monetary Policy in the Aftermath of Currency Crises: The Case of Asia,IMF Working Paper 98/170 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Goldfajn, Ilan, and Poonam Gupta, 1999, “Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis?IMF Working Paper 99/42 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Goldstein, Morris, 2001, “IMF Structural Policy Conditionality: How Much Is Too Much?IIE Working Paper No. 01–4 (Washington: Institute for International Economics).

    • Search Google Scholar
    • Export Citation
  • Gould, David M., and Steven B. Kamin, 2000, “The Impact of Monetary Policy on Exchange Rates During Financial Crises,U.S. International Finance Discussion Papers No. 669 (Washington: U.S. Board of Governors of the Federal Reserve System, International Finance Division).

    • Search Google Scholar
    • Export Citation
  • Guitián, Manuel, 1981, Fund Conditionality: Evolution of Principles and Practices, IMF Pamphlet Series, No. 38 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Hutchison, Michael M., 2001, “A Cure Worse Than the Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs,NBER Working Paper No. 8305 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Institute of International Finance, 1999, Report of the Working Group on Financial Crises in Emerging Markets (Washington).

  • International Monetary Fund, 1999, Policy Development and Review Department,Involving the Private Sector in Forestalling and Resolving Financial Crises” (Washington). Available via the Internet: http://www.imf.org/external/pubs/ft/series/01/index.htm

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2000a, Policy Development and Review Department,Review of Fund Facilities—Preliminary Considerations” (Washington). Available via the Internet: http://www.imf.org/external/np/pdr/fac/2000/index.htm

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2000b, Public Information Notice 00/37,Debt and Reserve-Related Indicators of External Vulnerability.Available via the Internet: http://www.imf.org/external/np/sec/pn/2000/pn0037.htm

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2001a, Policy Development and Review Department,Conditionality in Fund-Supported Programs—Overview” (Washington). Available via the Internet: http://www.imf.org/external/np/pdr/cond/2001/eng/overview/index.htm

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2001b, Policy Development and Review Department,Conditionality in Fund–Supported Programs—Policy Issues” (Washington). Available via the Internet: http://www.imf.org/external/np/pdr/cond/2001/eng/policy/index.htm

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund,, 2001c, Policy Development and Review Department,Structural Conditionality in Fund-Supported Programs” (Washington). Available via the Internet: http://www.imf.org/external/np/pdr/cond/2001/eng/struct/index.htm

    • Search Google Scholar
    • Export Citation
  • Kaminsky, Graciela, and Carmen M. Reinhart, 1999, “The Twin Crises: The Causes of Banking and Balance of Payments Problems,American Economic Review, Vol. 89 (June), pp. 473500.

    • Search Google Scholar
    • Export Citation
  • Kaplan, Ethan, and Dani Rodrik, 2001, “Did the Malaysian Capital Controls Work?NBER Working Paper No. 8142 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Kenen, Peter B., 2000, “Financial-Sector Reform in Emerging-Market Countries: Getting the Incentives Right,paper prepared for the Per Jakobsson Foundation panel discussion,Strengthening the Resilience of Global Financial Markets,Lucerne, Switzerland, June.

    • Search Google Scholar
    • Export Citation
  • Kopits, George, 2000, “How Can Fiscal Policy Avert Currency Crises?IMF Working Paper 00/185 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kraay, Aart, 2000, “Do High Interest Rates Defend Currencies During Speculative Attacks?Policy Research Working Paper No. 2267 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Krueger, Anne, and Aaron Tornell, 1999, “The Role of Bank Restructuring in Recovering from Crises: Mexico 1995–98,NBER Working Paper No. 7042 (Cambridge, Massachusetts: National Bureau of Economic Research), pp. 28 –34.

    • Search Google Scholar
    • Export Citation
  • Krugman, Paul, 1979, “A Model of Balance-of-Payments Crises,Journal of Money, Credit and Banking, Vol. 11 (August), pp. 31125.

  • Krugman, Paul, 1998, “What Happened to Asia?” (unpublished; Cambridge, Massachusetts: Massachusetts Institute of Technology).

  • Krugman, 2001, “Crises: The Next Generation?” (unpublished; Princeton: Princeton University).

  • Lane, Timothy D., Atish R. Ghosh, Javier Hamann, Steven Phillips, Marianne Schulze-Ghattas, and Tsidi Tsikata, 1999, IMF-Supported Programs in Indonesia, Korea, and Thailand: A Preliminary Assessment, IMF Occasional Paper No. 178 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Lane, Timothy D., and Steven Phillips, 2000, “Does IMF Financing Result in Moral Hazard?IMF Working Paper 00/168 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Lindgren, Carl-Johan, Thomas J.T. Balino, Charles Enoch, Anne-Marie Guide, Marc Quintyn, and Leslie Teo, 1999, Financial Sector Crisis and Restructuring: Lessons from Asia, IMF Occasional Paper No. 188 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • McBrady, Matthew R., and Mark S. Seasholes, 2000, “Bailing-In” (unpublished; Berkeley: University of California at Berkley).

  • Milesi-Ferretti, Gian Maria, and Assaf Razin, 1996, “Current Account Stability,Princeton Studies in International Finance No. 81 (Princeton, New Jersey: International Finance Section, Department of Economics, Princeton University).

    • Search Google Scholar
    • Export Citation
  • Mulder, Christian, Roberto Perelli, and Manuel Rocha, 2001, “The Role of Corporate, Legal, and Macro Balance Sheet Indicators in Crisis Detection and Prevention” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Musso, Michael, and Miguel A. Savastano, 1999, “The IMF Approach to Economic Stabilization,IMF Working Paper 99/104 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Mussa, Alberto, and Steven Phillips, 2001, “Comparing Projections and Outcomes of IMF-Supported Programs,IMF Working Paper 01/45 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Nunnenkamp, Peter, 1999, “The Moral Hazard of IMF Lending: Making a Fuss About a Minor Problem?Kiel Discussion Papers, March (Kiel: Institut für Weltwirtschaft).

    • Search Google Scholar
    • Export Citation
  • Olivier, Jeanne, and Jeromin Zettelmeyer, 2001, “International Bailouts, Moral Hazard, and Conditionally,paper prepared for the 33rd Economic Policy Panel meeting, Stockholm, April.

    • Search Google Scholar
    • Export Citation
  • Oxford Analytica, 2001, “Russia: Internal Debt (E),Oxford Analytica Brief (November 9, 2001, Part 1).

  • Özatay, F., 2000, “The 1994 Currency Crisis in Turkey,Journal of Policy Reform, Vol. 3, pp. 32752.

  • Radelet, Steven, and Jeffrey D. Sachs, 1998, “The East Asian Financial Crisis: Diagnosis, Remedies, Prospects,Brookings Papers on Economic Activity: 1, Brookings Institution, pp. 190.

    • Search Google Scholar
    • Export Citation
  • Rodrik, Dani, 1999, “The New Global Economy and Developing Countries: Making Openness Work,Policy Essay No. 24 (Washington: Overseas Development Council; Baltimore, Maryland: Johns Hopkins University Press).

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey D., Aaron Tornell, and Andrés Velasco, 1996, “The Collapse of the Mexican Peso: What Have We Learned?Economic Policy, No. 22 (April), pp. 1563.

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey D., Aaron Tornell, and Andrés Velasco, 1996, “Financial Crises in Emerging Markets: The Lessons from 1995,NBER Working Paper No. 5576 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Sargent, Thomas J., and Neil Wallace, 1985, “Some Unpleasant Monetarist Arithmetic,Quarterly Review, U.S. Federal Reserve Bank of Minneapolis, Vol. 9 (Winter), pp. 1531.

    • Search Google Scholar
    • Export Citation
  • Summers, Lawrence H., 2000, “International Financial Crises: Causes, Prevention, and Cures,American Economic Review, Papers and Proceedings (U.S.), Vol. 90 (May), pp. 116.

    • Search Google Scholar
    • Export Citation
  • Tanner, Evan, 2000, “Exchange Market Pressure and Monetary Policy: Asia and Latin America in the 1990s,Staff Papers, International Monetary Fund, Vol. 47, No. 3, pp. 31133.

    • Search Google Scholar
    • Export Citation
  • Üçer, E., Murat, C., Caroline van Rijckeghem, and R. Yolalan, 1998, “Leading Indicators of Currency Crises: A Brief Literature Survey and an Application to Turkey,Yapi Credit Economic Review, Vol. 9 (December),No. 2.

    • Search Google Scholar
    • Export Citation
  • West, Kenneth D., 1990, “The Sources of Fluctuations in Aggregate Inventories and GNP,Quarterly Journal of Economics, Vol. 105 (Winter), pp. 93971.

    • Search Google Scholar
    • Export Citation
  • Willett, Thomas D., 2000, “Understanding the IMF Debate,School of Politics and Economics Working Paper (Claremont, California: Claremont Graduate University).

    • Search Google Scholar
    • Export Citation
  • Zhang, Xiaoming Alan, 1999, “Testing for ‘Moral Hazard’ in Emerging Markets Lending,IIF Research Paper No. 99–1 (Washington: Institute of International Finance).

    • Search Google Scholar
    • Export Citation