Cover

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Introduction, Series Page, Title Page, Copyright

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pp. i-iv

Contents

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pp. v-vi

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Preface

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pp. vii-xii

This is a book about credibility building in the global economy. I embarked on this project in my attempt to understand the ways countries with a meager reputational track record to build credibility on can achieve policy credibility in the eyes of international markets. This question seemed important...

List of Acronyms

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pp. xiii-xiv

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1. The Puzzle of Credibility in International Markets

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pp. 1-23

In this book I explore a question that has preoccupied scholars for decades: How do governments establish a reputation in international markets? The advantages to governments of having a reputation for being reliable and credible are well known. It is much less clear how those reputations can be...

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2. A Theory of Credibility through Financial Integration

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pp. 24-50

Governments of countries with a history of chronic inflation and new or weak institutions find it difficult to signal a credible commitment to sound economic policies. As Gros (2003) observes, these countries can fall into a “low liquidity trap” that is associated with a high risk premium in the form of high interest...

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3. Foreign Bank Advantage in Comparative Perspective

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pp. 51-88

The main goal of this chapter is the empirical investigation of the relationship between the presence of foreign banks and policy credibility in emerging markets. The credibility theory predicts that reputable multinational banks enhance the credibility of institutions and policies of host nations...

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4. Currency Boards and Foreign Bank Presence

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pp. 89-130

The mechanisms by which foreign banks can influence the credibility of policies of host governments are not easily judged though simple quantitative indicators. This and the following chapter complement statistical findings about multinational banks as the external drivers of reputation by examining...

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5. Inflation Targeting and Foreign Bank Presence

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pp. 131-178

In this chapter I illustrate the main theoretical predictions about the dynamics of credibility building for inflation-targeting regimes. Currency boards, examined in chapter 4, and floating with an inflation target are fairly diάerent monetary regimes, providing a sharp contrast and comparison...

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6. Reputation in Crisis

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pp. 179-215

The previous chapters tested the main prediction of my credibility theory: that the presence of reputable multinational banks makes host countries more credible in the eyes of financial market participants. This chapter investigates how multinational banks behaved during financial booms and...

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7. Conclusion

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pp. 216-226

The need to establish policy credibility is acute in most emerging and developing countries, whether as a result of histories of high inflation and failed economic policies, or an absence of credible institutions, or because they are newcomers to the international stage. In writing this book, I have...

Notes

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pp. 227-254

Bibliography

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pp. 255-288

Index

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pp. 289-296