Fourth Annual IMF Research Conference

• Pages: 7-8

Page 7

Mundell-Fleming Lecture

Current Account Imbalances: History, Trends, and Adjustment Mechanisms

Sebastian Edwards (UCLA)

This paper analyzes the historical behavior of current account imbalances and the patterns of adjustment followed by countries with large balance of payments disequilibria. The focus is on the connection between adjustment and exchange rate changes and on the costs of current account deficit reversals, and their connection with "sudden stops" of capital inflows. In that context, the paper analyzes whether openness, the extent of dollarization, and the exchange rate regime affect the costs of reversals.

Papers

The Real Effects of Financial Integration

Jean Imbs (London Business School and CEPR)

This paper studies why, contrary to theory, fluctuations in GDP are more synchronized internationally than fluctuations in consumption. When financial integration increases, risk sharing synchronizes both consumption and GDP growth rates, with no effect on the discrepancy. Hence, the puzzle does not arise from failure to internationally diversify risk, but rather from the fact that financial flows also affect output correlations. Furthermore, while the bulk of risk sharing works via equities, long-term debt flows affect GDP correlations.

Are Immigrant Remittance Flows a Source of Capital for Development?

Ralph Chami (IMF), Connel Fullenkamp (Duke University), and Samir Jahjah (IMF)

This paper explores the role of remittances in developing countries. It develops a framework where, because of asymmetric information and economic uncertainty, remittances involve a moral hazard problem. The implication is that...