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Full-Text Articles in Social and Behavioral Sciences

What Makes Developing Asia Resilient In A Financially Globalized World?, Hiro Ito, Juthathip Jongwanich, Akiko Terada-Hagiwara Dec 2009

What Makes Developing Asia Resilient In A Financially Globalized World?, Hiro Ito, Juthathip Jongwanich, Akiko Terada-Hagiwara

Economics Faculty Publications and Presentations

The pullbacks of capital inflows to developing Asia following the onset of the global financial crisis in 2008 have brought renewed attention to the role and benefits of financial globalization. A number of notable distinctions between the current global crisis and the Asian financial crisis have become evident. Solid domestic institutions, especially in the financial sector; swift policy responses; and a sound macroeconomic environment with adequate reserves have helped the region to manage well the adverse impacts of the global crisis. Empirical analysis examining the link between capital account openness and output volatility reveals that a developing country with a ...


Surfing The Waves Of Globalization: Asia And Financial Globalization In The Context Of Trilemma, Joshua Aizenman, Menzie David Chinn, Hiro Ito Nov 2009

Surfing The Waves Of Globalization: Asia And Financial Globalization In The Context Of Trilemma, Joshua Aizenman, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

Using the "trilemma indexes" developed by Aizenman et al. (2008) that measure the extent of achievement in each of the three policy goals in the trilemma—monetary independence, exchange rate stability, and financial openness—this paper examines how policy configurations affect macroeconomic performances with focus on the Asian economies. We find that the three policy choices do not matter for per capita economic growth. However, they do matter for output volatility and the medium-term level of inflation. Greater monetary independence is associated with lower output volatility while greater exchange rate stability implies greater output volatility, which can be mitigated if ...


A Cross-Country Empirical Analysis Of International Reserves, Yin-Wong Cheung, Hiro Ito May 2009

A Cross-Country Empirical Analysis Of International Reserves, Yin-Wong Cheung, Hiro Ito

Economics Faculty Publications and Presentations

Using data from more than 100 economies for the period of 1975 to 2005, we conduct an extensive empirical analysis of the determinants of international reserve holdings. Four groups of determinants, namely, traditional macro variables, financial variables, institutional variables, and dummy variables that control for individual economies’ characteristics are considered. We find that the relationship between international reserves and their determinants is significantly different between developed and developing economies and is not stable over time. The estimation results indicate that, especially during the recent period, a developed economy tends to hold a lower level of international reserves than a developing ...


U.S. Current Account Debate With Japan Then, With China Now, Hiro Ito Feb 2009

U.S. Current Account Debate With Japan Then, With China Now, Hiro Ito

Economics Faculty Publications and Presentations

This paper examines two U.S. current account deficit episodes, one in the 1980s and the other in the current 2000s, in which Japan and China, respectively, are the current account surplus countries that are criticized for contributing to the deficits. In both periods, U.S. policy makers pointed out the underdeveloped and closed financial markets of the current account surplus countries and advocated for these countries to fix the deficiencies, a position akin to the current “saving glut” argument. In both episodes, the current account surplus countries have criticized the United States for its low saving, especially public saving ...