Chapter

Financial Opening

Joshua Aizenman

in Challenges to Globalization

Published by University of Chicago Press

Published in print April 2004 | ISBN: 9780226036151
Published online February 2013 | e-ISBN: 9780226036557 | DOI: http://dx.doi.org/10.7208/chicago/9780226036557.003.0013
Financial Opening

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This chapter has two goals. First, it evaluates the empirical evidence of increasing the chances of financial crises induced by opening up developing countries to short-term capital inflows. Second, the chapter appraises the various proposals made for mitigating the severity of financial crises. It argues that there is solid evidence that financial opening increases the chance of financial crises. There is more tenuous evidence that financial opening contributes positively to long-run growth. Hence, there may be a complex trade-off between the adverse intermediate run and the beneficial long-run effects of financial opening. A commentary is also included at the end of the chapter.

Keywords: financial crises; developing countries; short-term capital; financial opening

Chapter.  10368 words.  Illustrated.

Subjects: International Economics

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