Sins of the Fathers - The Role of Reputation in Capital Market Integration and the Choice of Exchange Rate Regime

This project investigates, theoretically and empirically, how past and present reputation for monetary policy credibility influences a country's choice of exchange rate regime and its ability to borrow internationally in domestic currency. The inability of emerging market countries to borrow in domestic currency is an important source of global financial instability, and the study contributes to an understanding of how policymakers can better facilitate the process of international financial integration. By introducing new advances in the theory of reputation into models of exchange rate crises and examining lessons from Australian financial history, the research brings a fresh perspective to existing analyses of financial crises.