Preface

The year 1973 was a transitional one for the global economy. Attempts to revive the Bretton Woods system of fixed exchange rates were abandoned; increases in oil prices led to the occurrence of higher prices and falling output, which was labeled “stagflation”; and it was the last year that the U.S. government maintained restrictions on capital flows. There was one other event of somewhat lesser significance: my graduation from Georgetown University’s School of Foreign Service, where I developed an interest in international economics. After two years of work in New York, I entered Boston University’s graduate program in economics. I subsequently was fortunate to receive an appointment to the faculty at Wellesley College, where I have remained ever since.

I began my professional academic life, therefore, during the post–Bretton Woods era of currency regime and financial liberalization. The removal of capital controls by the United States was followed by financial deregulation in other developed economies in the 1970s, and by many Asian and Latin American countries during the following decades. Capital flows rapidly expanded, and by the end of the century it was possible to refer to the integration of financial markets across borders as the latest manifestation of globalization (Mishkin 2006). But it was also a period of economic volatility and upheaval, which included the debt crisis of the 1980s, the financial crises in the emerging markets of the 1990s, and, most recently, the global crisis of 2008–9.