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A counter-cyclical framework for a development-friendly international financial architecture

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Listed:
  • José Antonio Ocampo
  • Stephany Griffith-Jones

Abstract

The major task of a development-friendly international financial architecture is to mitigate pro-cyclical effects of financial markets and open “policy space” for counter-cyclical macroeconomic policies in the developing world. This paper explores a series of policy instruments for this purpose: counter-cyclical prudential regulatory and supervisory frameworks; market mechanisms that better distribute the risk faced by developing countries through the business cycle; multilateral instruments that encourage more stable private flows; and better provision of counter-cyclical official liquidity. It also suggests that regional macroeconomic consultation, and common reserve funds or swap arrangements among developing countries can play a role in this regard.

Suggested Citation

  • José Antonio Ocampo & Stephany Griffith-Jones, 2007. "A counter-cyclical framework for a development-friendly international financial architecture," Working Papers 39, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:39
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    Cited by:

    1. Josef T. Yap, 2007. "Ten Years After : Financial Crisis Redux or Constructive Regional Financial and Monetary Cooperation?," Development Economics Working Papers 22702, East Asian Bureau of Economic Research.
    2. José Ocampo, 2007. "The Instability and Inequities of the Global Reserve System," International Journal of Political Economy, Taylor & Francis Journals, vol. 36(4), pages 71-96.
    3. Bernhard Tröster & Karin Küblböck, 2020. "Unprecedented but not Unpredictable: Effects of the COVID-19 Crisis on Commodity-Dependent Countries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(5), pages 1430-1449, December.
    4. Metin Ozdemir & Selim Tuzunturk, 2009. "Is price stability enough? Macroeconomic performance of inflation targeting in developing countries," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 1(4), pages 352-372.
    5. von Arnim, Rudi & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2015. "Commodity dependence and price volatility in least developed countries: A structuralist computable general equilibrium model with applications to Burkina Faso, Ethiopia and Mozambique," Working Papers 52, Austrian Foundation for Development Research (ÖFSE).
    6. Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) (ed.), 2015. "Österreichische Entwicklungspolitik 2015. Rohstoffe und Entwicklung," Austrian Development Policy Report, Austrian Foundation for Development Research (ÖFSE), number 268194.
    7. von Arnim, Rudiger & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2018. "Commodity price shocks and the distribution of income in commodity-dependent least-developed countries," Journal of Policy Modeling, Elsevier, vol. 40(2), pages 434-451.
    8. Tröster, Bernhard, 2020. "Commodity-dependent countries in the COVID-19 crisis," Briefing Papers 25, Austrian Foundation for Development Research (ÖFSE).

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    More about this item

    Keywords

    volatility; contagion; financial crises; counter-cyclical macroeconomic policies; counter­cyclical prudential regulation; GDP-indexed and local currency bonds; regional macroeconomic cooperation.;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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