Banking, Monetary Policy and the Political Economy of Financial Regulation
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Banking, Monetary Policy and the Political Economy of Financial Regulation

Essays in the Tradition of Jane D'Arista

Edited by Gerald A. Epstein, Tom Schlesinger and Matías Vernengo

The many forces that led to the economic crisis of 2008 were in fact identified, analyzed and warned against for many years before the crisis by economist Jane D’Arista, among others. Now, writing in the tradition of D’Arista's extensive work, the internationally renowned contributors to this thought-provoking book discuss research carried out on various indicators of the crisis and illustrate how these perspectives can contribute to productive thinking on monetary and financial policies.
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Chapter 10: Would a North American monetary union protect Canada and Mexico against the ravages of “Dutch disease”? A post-financial crisis perspective

Robert A. Blecker and Mario Seccareccia


The 1990s saw global implementation of the Washington Consensus, a key element of which was financial liberalization that included promotion of international financial capital mobility. This chapter re-examines the economics of international financial capital mobility and argues there are good economic reasons for restoring capital controls as a standard part of the policy arsenal. The current moment constitutes an opportune time to re-engage this issue. The policy debate over capital controls has been closed for the past 25 years. Now, it is gradually being pried open for both political and economic reasons.2 At the political level there is increasing popular disenchantment with globalization. At the economic level, proponents of financial liberalization were humbled by the unexpectedness and severity of the East Asian financial crisis of 1997. That crisis has compelled even die-hard liberalizers to qualify talk of capital flow liberalization in terms of a) prior development of appropriate financial market institutions, and b) sequencing of reforms that start with domestic financial markets and only extend gradually to international opening.

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