This volume's essays, written by well-known academics and policy analysts, discuss the impact of increased capital mobility on macroeconomic performance. The authors highlight the most adequate ways to manage the transition from a semi-closed economy to a semi-open one. Additionally, issues related to the measurement of openness, monetary control, optimal exchange rates regimes, sequencing of reforms, and real exchange rate dynamics under different degrees of capital mobility are carefully analyzed; areas covered include Europe, the Asian Pacific region, and Latin America.

In late December 1994--after having attracted widespread praise as a model of economic reform and becoming a super-magnet for international investors, as well as the United States partner in the newly consummated NAFTA trade agreement--Mexico seemingly overnight plunged into political and economic crisis. The perceived threat to the global economy was to lead the Clinton administration, against strong congressional criticism, to push through an unprecedented $40-billion international rescue package. What went wrong in Mexico? What role was played by flaws in the design of the Mexican reforms,...