Macro-Financial Policymaking in Emerging Markets

School of International and Public Affairs

School of International and Public Affairs


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About the course

The current global crisis starkly conveys the relevance of international financial links across countries and their impact on the real economy. This interconnectedness poses a set of challenges for policymakers and researchers alike, as international shocks have increasingly influenced macroeconomic outcomes. With these challenges in mind, Columbia University School of International and Public Affairs (SIPA) and the Inter-American Development Bank (IDB) have developed a course on macro-financial policymaking in emerging markets.The goal of this executive training program is to help world practitioners design and implement macroeconomic and financial policies in a cohesive and comprehensive fashion based on state-of-the-art emerging-market knowledge.

This program is designed for the experienced global policymaker from Emerging Market governments as well as international financial institutions. It covers macro-financial analytical issues and provides quantitative tools such as growth vulnerability to external factors, international liquidity and vulnerability to financial crises, fiscal vulnerability to Sudden Stops and banking stress tests. The course sessions will be led by a group of experts in the field from Columbia University, UMD, IDB, CERES, and the US Federal Reserve Bank bringing together the appropriate focus, theory, and best-practice methods in training.


  • International liquidity and vulnerability to financial crisis
  • International shocks, monetary and exchange rate responses, and international reserve management
  • Monetary policy responses to Sudden Stops in capital flows
  • Financial Regulation
  • Debt, bonanzas and financial crisis in history
  • Banking crisis development and resolution
  • China, Brazil and the European crisis

Main Modules

*The global environment, initial macro-financial conditions and output outcomes. *

Before the subprime crisis, the developing world benefited from extremely favorable external conditions (with some exceptions). Many believed that the consequent bonanza was the result of the success of domestic policies. Unfortunately, the recent financial crisis and the associated output slowdown have made it clear that external factors continue to play a key role in output outcomes in emerging markets. But, more importantly, it made it clear that financial sector factors play a key role, making imperative a deep analysis of financial sector vulnerabilities.

*External factors, growth, international liquidity and vulnerability to financial crisis. *

Recent research suggests that a small set of external factors (US T-bond rates, high yield spreads, terms of trade and G-7 growth) account for a large share of Emerging Market (EM) GDP fluctuations. How do shocks to external factors affect EM GDP growth? How does that impact on public sector accounts? Considering debt maturity profiles and precarization of international financial market access conditions, what is the final effect of external factors and fiscal expenditure decisions on international liquidity and the chances of facing a financial crisis?

*The key role of the financial sector and policy responses to sudden stop episodes. *

Based on country experiences, recent research suggest that high foreign-exchange-denominated debt and current account deficits have been major determinants of financial crisis and output performance in emerging economies during systemic sudden stops. What are the channels involved? What indicators are available to gauge the soundness of the financial and public sectors?

Are current monetary regimes adapted to confront swift changes in the global financial environment? Can emerging countries afford expansionary monetary and fiscal policies in times of crisis? Could Chile’s success with counter-cyclical policy and Kazakhstan’s success with a stabilization fund be replicated? What are the constraints? How have recently developed, hard-to-trace financial instruments impacted global financial markets? Which policies can (or cannot) buffer the impact of such instruments? Is more regulation the solution? Is there room for a strategic use of international reserves to buffer the impact of shocks? How could international financial organizations help?

The recent experiences of Latin America with recoveries from systemic financial crises suggest that output collapses have been followed by credit-less recoveries to pre-crisis output levels in a relatively short span (the so-called phoenix miracles). What are the implications of these findings for the design of the policy response?

Inflation, deflation and exchange rate regimes.
What have we learned from recent experiences of commodity price increases and inflation? The current global growth slowdown has raised concerns about price deflation. Is inflation targeting the right regime to manage deflation? Under what conditions?

Debt challenges: The developing world seems to have learned the debt lessons of the 1990s. Low public debt and longer maturities have been significantly achieved in many emerging markets. But debt risks have not disappeared. What are optimal debt management policies under changing conditions in international financing terms? Today, private debt has become a source of fiscal risk for emerging markets since in several instances the government has acted as domestic lender of last resort. What have been the channels of private sector indebtedness? What are the links between public debt and inflation expectations?

Quantitative Tools

Analytical discussions will be complemented by the following applications:

  • The impact of external factors on growth
  • A liquidity framework for the analysis of financial crisis vulnerability
  • Fiscal sustainability under Sudden Stops and under uncertainty
  • Banking stress tests


Charles Calomiris

Focus areas: Banking, corporate finance, financial history, monetary economics Charles W. Calomiris is Henry Kaufman Professor of Financial Institutions at Columbia Business School, Director of the Business School’s Program for Financial Studies and its Initiative on Finance and Growth in Emergi...

Guillermo Calvo

Focus areas: Macroeconomics of emerging market and transition economies, capital flows and balance-of-payments crises in emerging market economies Guillermo Calvo directs SIPA''s mid-career MPA in Economic Policy Management (MPA-EPM) program. Calvo''s main field of expertise is macroeconomics of...

Carlos Vegh

Professional links NBER Working Papers Economia (Journal of LACEA) VOX (CEPR) profile page Google Scholar Profile NBER Reporter: Research agenda on fiscal policy in emerging markets Background and Education Carlos A. Vegh is the Fred H. Sanderson Professor of International Economics at Johns H...

Pierre Olivier Gourinchas

Education PhD, Economics, MIT MA, Economics, Ecole des Hautes Etudes en Sciences Sociales MA, Engineering, Ecole Nationale des Ponts et Chaussees BA, Physics, Ecole Polytechnique     Positions Held At Haas since 2013 2013 – present, Professor of Economics, Haas School of Business 2007 – presen...

Pierre Richard Agenor

Biography Profile: BA, MSc, PhD Prior to joining the University of Manchester, Professor Agénor was Lead Economist and Director of the Macroeconomics and Policy Assessment Skills Program, World Bank. Prior to that, he was an Economist and Senior Economist in the Research Department of the Intern...

Santiago Levy

Mexican economist Santiago Levy Algazi became the Vice President for Sector and Knowledge on March 1, 2008. From August 2007 to February 2008, he served as General Manager and Chief Economist for the IDB Research Department. Previously, he was General Director at the Mexican Social Security Inst...

Alejandro Izquierdo

Alejandro Izquierdo is currently a Principal Economist at the Research Department of the Inter-American Development Bank. Previously he worked at the World Bank in the Department of Economic Policy, and taught courses on macroeconomics and international finance at several Latin American universit...

Enrique Mendoza

Professor Mendoza comes to Penn from the University of Maryland where he was Neil Moskowitz Professor of Economics. He previously taught at Duke University and served for several years as an economist for the International Monetary Fund and the Board of Governors of the Federal Reserve System. He...

Eduardo Cavallo

Eduardo Cavallo is currently a Senior Economist at the Research Department of the Inter-American Development Bank (IDB) in Washington DC. Prior to re-joining the IDB, Eduardo was a Vice-President and Senior Latin American Economist for Goldman Sachs in New York. Eduardo had already worked at the ...

Liliana Rojas

Liliana Rojas-Suarez is a senior fellow at the Center for Global Development with expertise on Latin America, financial regulation, Basel II and III and the development impact of global financial flows. She is the co-author or editor of almost a dozen books. Her most recent book is Growing Pains ...

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Macro-Financial Policymaking in Emerging Markets at School of International and Public Affairs

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