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Financial Policies and the World Capital Market

The Problem of Latin American Countries

The essays brought together in this volume share a common objective: To bring a unifying methodological approach to the analysis of financial problems in developing, open economies. While the primary focus is on contemporary Latin America, the methods employed and the lessons learned are of wider applicability. The papers address the financial integration issue from three different perspectives. In some cases, a country study is the vehicle for an econometric investigation of a particular external linkage. In other cases, an individual country’s experience suggests an economic model in which the stylized facts may be analyzed and developed. A third direction is unabashedly theoretical and formulates more general principles which are broadly applicable rather than country-specific.

Table of Contents

Preface
Introduction

1. Stories of the 1930s for the 1980s
Carlos F. Diaz Alejandro
Comment: Miguel Mancera

2. Optimal Economic Integration
Michael Mussa

3. Seigniorage and Fixed Exchange Rates: An Optimal Inflation Tax Analysis
Stanley Fischer

4. Dollarization in Mexico: Causes and Consequences
Guillermo Ortiz
Comment: Thomas J. Sargent

5. On Equilibrium Wage Indexation and Neutrality of Indexation Policy
Nissan Liviatan
Comment: Mario Henrique Simonsen

6. Real versus Financial Openness under Alternative Exchange Rate Regimes
Michael Bruno
Comment: Peter M. Garber

7. Financing Private Business in an Inflationary Context: The Experience of Argentina between 1967 and 1980
Domingo F. Cavallo and A. Humberto Petrei
Comment: Charles E. McLure, Jr.
Comment: Andrew Abel

8. Debt and the Current Account Deficit in Brazil
Olivier Jean Blanchard

9. Trying to Stabilize: Some Theoretical Reflections Based on the Case of Argentina
Guillermo A. Calvo
Comment: Herminio A. Blanco
Comment: Ricardo Ffrench-Davis

10. Interest Differential and Covered Arbitrage
Jose Saul Lizondo
Comment: Kenneth Rogoff

11. Capital Mobility and the Scope for Sterilization: Mexico in the 1970s
Robert E. Cumby and Maurice Obstfeld
Comment: Jacob A. Frenkel

12. Panel Discussion: The Capital Market under Conditions of High and Variable Inflation 277
Juan Carlos de Pablo, Miguel Mancera,and Mario Henrique Simonsen

List of Contributors
Author Index
Subject Index

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