from Follow the Money

My paper on Argentina and the Fund’s balance sheet paper: More residue from a former life

December 11, 2005

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Before working on the US current account, Chinese reserve accumulation and petrodollars, I spent most of my time thinking about financial crises in emerging economies.  

In early 2004, I worked primarily on two projects.

  1. A paper on the political economy of Argentina's crisis  for Oxford's Global Economic Governance Programme.  The paper tries to explain why there  never was a political consensus in Argentina to do anything other than find new sources of external financing to avoid default and hold on to the (quasi) currency board until Argentina has absolutely no other choice. 
  2. And, as a visiting scholar at the IMF, I was one of many who worked to develop a template for assessing the national and sector balance sheets of key emerging economies.    That work has been gathered together in an IMF occasional paper.

I am proud of my contribution to the IMF's balance sheet project.  I also remember when much of the Fund did not exactly embrace balance sheet analysis.   The standard complaints: it took too much work, and it required too much data; it was not "mostly fiscal;" and it wasn't created here.

It did not really take off until some folks in the IMF's PDR division started to use some of the ideas we developed in their country work.   See, for example, Christian Keller and Chris Lane's assessment of Turkey's balance sheet risks, which was published as part of another IMF occasional paper.  Rough balance sheet analysis often did not take tons of data so much as using existing data differently.  An example: take domestic bank deposits denominated in foreign currency and add in the banks external liabilities, and you generally have a pretty good estimate of the size of the banking system's fx balance sheet ...   

The board applauded their work.  People noticed.  And so on.   I just noticed that BNP updated the IMF's data in their Turkey analysis, which suggests that at least a few people in the markets also found the IMF's work useful.  

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