Third Annual IMF Research Conference

• Pages: 10-11

Page 10

Mundell-Fleming Lecture

Explaining Sudden Stop, Growth Collapse and BOP Crisis: The Case of Distortionary Output Taxes

Guillermo A. Calvo (Inter-American Development Bank, University of Maryland, and NBER)

This paper discusses a model in which growth discontinuously switches from high to low as the fiscal burden reaches a critical level. Growth collapse is associated with a sudden stop of capital inflows, real depreciation, and a drop in output-all of which have occurred during recent financial crises in emerging markets. An important policy implication of the model is that, to avoid sudden stop crises, policymakers should aim at improving fiscal institutions.

Papers

Towards a Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy Practice Around the World

Patrick Bolton (Princeton University)

Discussant: Jeffrey Frankel (Harvard University)

This paper provides an overview of key elements of corporate bankruptcy codes and practice around the world that are relevant to the debate on sovereign debt restructuring. It highlights the main components common to most bankruptcy reorganization institutions. It argues that these components ought to be present in some form in any sovereign debt restructuring procedure even if important differences exist between corporations and sovereign states.

IS-LM-BP in the Pampas

Luis Felipe Céspedes (IMF), Roberto Chang (Rutgers University), and Andrés Velasco (Harvard University)

Discussant: Michael Devereux (University of British Columbia)

Emerging markets (sometimes endowed with fertile pampas) have limited access to world capital markets and suffer from "original sin": they cannot borrow in their own currency. Does this mean that monetary and exchange rate policy has nonstandard effects in such countries? The authors develop a simple IS-LM-BP model with balance sheet effects to study that question. Their answer: it all depends.

Securities Transaction Taxes and Financial Markets

Karl Habermeier (IMF) and Andrei A. Kirilenko (IMF)

Discussant: Kristin Forbes (MIT)

This paper considers the impact of transaction taxes on financial markets, drawing on the literature on market microstructure, asset pricing, rational expectations, and international finance. The authors argue that securities transaction taxes "throw sand" not at the wheels, but into the engine of financial markets. Transaction taxes can have...