This book provides a comprehensive overview of the financial integration of emerging economies through an in-depth analysis of the international monetary system, how it impacts capital flows and exchange rates, and its implications for policy making.

The financial integration of emerging economies has been a remarkable development of the past two decades. The growth of cross-border transactions and asset ownership, not least through the accumulation of foreign exchange reserves, has put many of these countries in a more prominent, if still peripheral, position within the global financial system. This has not been a smooth process, as integration has been marked by cyclical waves of capital flows, with financial and currency instability often accompanying the acute phases of these cycles. While conventional economic theory traditionally sees financial integration as a positive development, Post-Keynesian economists, working in the tradition of Keynes, Minsky and Kalecki, have long taken a more sceptical viewpoint. By centring the analysis of financial dynamics on concepts as liquidity, uncertainty, balance-sheet structures and institutions, Post-Keynesian theory highlights the intrinsic character of shocks imposed by financial integration upon emerging economies, and their implications for economic growth and distribution. This book demonstrates that these analyses can be fruitfully used to gain a better understanding of financial (in)stability and economic development in emerging economies as they integrate into the global financial system.

This work provides key reading for students and scholars of economics, political economy and finance that are interested in the financial integration of emerging economies, and how the heterodox tradition of Post-Keynesian economics contributes to its analysis.

part I|39 pages

Introduction and background

chapter 1|11 pages


ByBruno Bonizzi, Annina Kaltenbrunner, Raquel A. Ramos

chapter 2|14 pages

Two post-Keynesian approaches to international finance

The compensation thesis and the cambist view
ByMarc Lavoie

chapter 3|12 pages

Trade versus capital flows

The key implicit and methodological differences between the Neoclassical and the Post Keynesian approaches to exchange rate determination
ByJohn T. Harvey

part II|58 pages

Minsky, balance sheets and cycles

chapter 4|13 pages

A Minskyan framework for the analysis of financial flows to emerging economies

ByBruno Bonizzi, Annina Kaltenbrunner

chapter 6|14 pages

Cost competitiveness and asset prices as determinants of the current account in emerging economies

ByAlexander Guschanski, Engelbert Stockhammer

chapter 7|15 pages

Space in Post Keynesian monetary economics

An exploration of the literature
ByGary Dymski, Annina Kaltenbrunner

part III|65 pages

Currency hierarchy

chapter 8|15 pages

Evolving international monetary and financial architecture and the development challenge

A liquidity preference theoretical perspective
ByJörg Bibow

chapter 9|21 pages

International money, privileges and underdevelopment

ByHansjörg Herr, Zeynep Nettekoven

chapter 10|12 pages

The Post Keynesian view on exchange rates

Towards the consolidation of the different contributions in the ABM and SFC frameworks
ByRaquel A. Ramos, Daniela Magalhães Prates

chapter 11|15 pages

A Post Keynesian framework for real exchange rate determination

An overview
ByLúcio Barbosa, Frederico G. Jayme, Fabrício J. Missio

part IV|49 pages

Current account and growth

part V|60 pages

Policy implications

chapter 15|13 pages

Implications of modern money theory on development finance

ByYan Liang

chapter 16|15 pages

Monetary sovereignty in the Post Keynesian perspective

In the search of a concept
ByDaniela Magalhães Prates

chapter 17|13 pages

Dealing with global financial asymmetry

Contributions of regional monetary cooperation between emerging markets and developing countries
ByLaurissa Mühlich, Barbara Fritz

chapter 18|17 pages

De-regulation of finance in China and India

A Post-Keynesian analysis
BySunanda Sen