Guest editorial

Journal of Financial Economic Policy

ISSN: 1757-6385

Article publication date: 8 November 2011


Willett, T.D. (2011), "Guest editorial", Journal of Financial Economic Policy, Vol. 3 No. 4.



Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

Guest editorial

Article Type: Guest editorial From: Journal of Financial Economic Policy, Volume 3, Issue 4

About the Guest EditorsThomas D. Willett (PhD, University of Virginia) is the Horton Professor of Economics at Claremont Graduate University and Claremont McKenna College and Director of the Claremont Institute of Economic Policy Studies and of its China-Asia Pacific Political Economy Program. Before coming to Claremont he was on the faculties of Cornell and Harvard Universities and served in Washington, DC as a Senior Economist on the President’s Council of Economic Advisers and as Director of International Research at the US Treasury. He has also been a Visiting Scholar at the International Monetary Fund and served as editor or member of the editorial board of 14 professional journals in the areas of economics, public policy, and international relations. He has written widely in the areas of monetary and financial economics and the political economy of public policy with a particular focus on issues of international money and finance. He has been a leader in the movement to better integrate economic and political analysis, especially in the area of international political economy. His recent research has focused particularly on international capital flows, currency policies, and currency and financial crises and issues of domestic and international financial reform where he combines analysis from political economy, behavioral finance, and complexity economics.

Apanard (Penny) Angkinand (PhD, Claremont Graduate University) is an Economist in the Financial Research Group at the Milken Institute. Her research focuses on financial institutions, international finance, emerging market economies and financial crises. Her work has been published in various academic journals, including the Journal of International Money and Finance, International Review of Finance, Open Economies Review, Journal of International Financial Markets, Institutions & Money, and International Journal of Economics and Finance, as well as in several books and edited volumes. Prior to joining the Institute, Dr Angkinand was an Assistant Professor of Economics at the University of Illinois at Springfield, 2005-2008. While completing her PhD, she also held Visiting Scholar positions at the Claremont Institute for Economic Policy Studies and the Freeman Program in Asian Political Economy at the Claremont Colleges as well as a Lecturer of Economics at Pitzer College, California State Polytechnic University, Pomona and the University of Redlands. Angkinand received a PhD in Economics from Claremont Graduate University in 2005.

International comparisons of financial policies and their interactions

Among the most important developments over the last few decades in the analysis of economic and financial policies has been the growing recognition of the importance of international economic and financial interdependence and of the influence of institutional factors on both the choice and effectiveness of policies. All of these factors have increased the interactions of researchers from economics and political science leading to substantial increases in the economic and financial sophistication of many political scientists and the institutional and political economy sophistication of many economists and financial experts.

These trends have generated a high demand for quantitative measures both of various types and economic and financial interdependence and of economic and financial institutions and policies to be used in empirical research. There has also been a boom in the development of measures of political variables such as the strength of governments and political instability.

The measures produced have been of varying quality and evaluations and even the existence of such datasets are often difficult for new researchers in these areas to find. The Claremont Center for Economic Policy Studies and the School of Politics and Economics at Claremont Graduate University have been among the research groups most active in this area. Some time ago we decided that it would be useful to produce a set of analyses that would make it easier for other researchers to access these developments and to find overviews and evaluations of these datasets and measures. With this in mind in addition to our own research and analysis we have been holding workshops in Claremont and sponsoring session at meetings of professional associations in order to engage a broader set of researchers in our project. As we have gone along we have made use of the fruits of our project in a number of research papers many of which are referenced in their papers in this special issue. One volume of surveys of political economy and institutional measures has been published (Banaian and Roberts, 2008) and we are delighted that our second set of surveys fits well with the objectives of the Journal of Financial Economic Policy.

In this special issue we focus on assessments of measures of financial policies and their international interactions. The use of quantitative measures of financial economic policies has become a frequent aspect of studies of financial economic policy issues and efforts to investigate the international interactions of these policies has become of increasing importance. Thus, it is important that researchers should be aware of the major datasets available and their major strengths and weaknesses. Likewise there are often serious methodological issues involved in measures of international financial interdependence. Again it is important to understand their major strengths and weaknesses. One theme of our surveys is that there is almost never one measure that is best for all purposes. Thus, researchers’ choice of measures should often depend on the particular issues being investigated.

Our surveys will be spread over two issues of the journal. The papers in the first issue focus on measurements of domestic and international financial policies and outcomes. The papers in the following issue concentrate on measures of the international interdependence of interest rate policies, equity markets, and aggregate economic activity, and the controversial issue of measuring economic and financial contagion.

While designed so that they can be read by individuals without a previous background in the use of the measures discussed, these survey papers present valuable overviews for researchers in these fields as well. They contribute much more than just describing and comparing the available international comparisons of financial policies. They offer critical analyses of the strengths and weaknesses of the various measures covered and in many instances raise major methodological issues about the measures and indicate directions for future improvements in the measures. They also give examples of how the measures are used in policy research. This should be particularly useful for new researchers in these areas and for faculty helping graduate and advanced undergraduate students get started on research projects.

Papers in this special issue

The first paper in this issue Thomas Willett, Eric M.P. Chiu, Sirathorn (B.J.) Dechsakulthorn, Ramya Ghosh, Bernard Kibesse, Kenneth Kim, Jeff (Yongbok) Kim, and Alice Ouyang, “Classifying international aspects of currency regimes”, discusses major issues in classifying exchange rate regimes and their relationships with domestic monetary policies. The first part critically reviews of the major sets of classifications that have been recently developed and cover large numbers of countries over time. The second part critiques other methodologies that have been offered and makes suggestions for ways to study particular policies in detail.

International financial policies and financial crises are often closely linked. To examine these relationship empirically, both policies and crises must be clearly defined. The second paper, Levan Efremidze, Samuel M. Schreyer, and Ozan Sula “Sudden stops and currency crises”, illustrates the ambiguities of several crisis concepts. International surges and sudden stops or reversals of financial flows have become a major source of concern for many countries as have currency crises. These have been widely thought of as closely related developments. Our survey finds, however, that not only are there a number of different measures of these phenomena that have been used in the research literature but that over a wide range of these measures the overlap between currency crisis and sudden stop measures is frequently less than 50 percent. This paper discusses important issues for policy and future research that are raised by these findings.

The third paper Puspa Amri, Apanard P. Angkinand, and Clas Wihlborg “International comparisons of bank regulation, liberalization, and banking crises” reviews measures of banking crises and the more comprehensive datasets of measures of financial liberalization and regulation and supervision that have recently become available. The authors show that many of the disagreements in the banking crisis literature about the relationships between these financial policies and the likelihood of banking crises are due to the differences in the chosen proxies. One important finding is that the effects of financial liberalization depend importantly on the quality of financial regulation and supervision. Again they find that the best measures to use often and depend on the research questions being asked.

The fourth paper Richard C.K. Burdekin, King Banaian, Mark Hallerberg, and Pierre L. Siklos on “Fiscal and monetary institutions and policies: onward and upward”, focuses on domestic monetary and fiscal policies. In addition to reviewing many different measurements of the stance of these policies, they authors also discuss the literature on the institutional environments that influence policy making. Particular attention is given to the measurement of central bank independence. The paper emphasizes the need to understand monetary and fiscal rules as they progress over time.

Thomas D. Willett, Apanard P. AngkinandGuest Editors

The full versions of the papers

In a number of cases space limitations have prevented us from publishing the full versions of the survey papers prepared. As a result we have had to sharply condense some sections. We have provided short summaries of these sections in the papers and invite readers to consult the full versions of the papers on the web site of the Claremont Institute for Economic Policy Studies (available at:


Banaian, K. and Roberts, B. (2008), The Design and Use of Political Economy Indicators: Challenges of Definition, Aggregation, and Application, Palgrave MacMillan, New York, NY