
Contents
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Prologue: Persistence and Change in the Economics of International Capital Flows Prologue: Persistence and Change in the Economics of International Capital Flows
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The Comeback of Financial Crises in the Global Economy: The Latin American Debt Crisis The Comeback of Financial Crises in the Global Economy: The Latin American Debt Crisis
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Bad Things Happen to Good Countries: The Unexpected European Financial Crisis of 1992 Bad Things Happen to Good Countries: The Unexpected European Financial Crisis of 1992
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The Next International Financial Crisis and the NICs: East Asia and Financial Contagion The Next International Financial Crisis and the NICs: East Asia and Financial Contagion
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The New Financial Architecture: Prediction, Prevention, and Management The New Financial Architecture: Prediction, Prevention, and Management
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Predicting Financial Crises Predicting Financial Crises
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Preventing Financial Crises Preventing Financial Crises
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Management of Financial Crises Management of Financial Crises
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The Highly Indebted Poor Countries (HIPCs) and Debt Relief The Highly Indebted Poor Countries (HIPCs) and Debt Relief
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Summary Summary
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13 International Financial Flows and Financial Crises after the End of the Bretton Woods System
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Published:January 2024
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Abstract
International capital flows resumed in the 1970s. These international financial flows were often a driver for instability and crises instead of economic growth. The determinants of these crises varied over the years, but cross-border capital flows, fixed exchange rates were often involved. Incentive problems like moral hazard played a role, as did the structure of international lending and local policy choices. The successive waves of crises challenged the world to learn from and adapt to the new reality of financial flows with new policies. International lending and borrowing also created slow-burn, train-wreck-in-slow-motion debt crises in dozens of the world’s poorest countries. Unsustainable rises in foreign debt culminated in a powerful international movement in favor of debt relief. In these countries, odious debt—national debt piled up by despotic (and unaccountable) politicians—tended to crush the basis for economic growth for generations.
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