Varieties of Capital-Market Crises

Peer Reviewed icon Peer Reviewed
Date issued
Aug 1995
Subject
Fiscal Management;
Financial Crisis and Structural Adjustement;
Financial Market
Category
Working Papers
In this post-modern world of high capital mobility, countries are being disciplined by the anonymous capital market. One view of the situation -perhaps the prevalent view among economists- is that Wall Street gets into your hair because you are running an unsustainable economic program and crises are bound to happen. A polar view is that countries are at the mercy of the capital market. This paper attempts to bring these views under one roof, putting special emphasis on balance-of-payment crises.