In the last chapterwe examined the recent financial crises in Mexico and Thailand in some detail, because these were the two most important crises among emerging economies that entered the decade of the nineties with a policy commitment to reform domestic financial systems and integrate themselves more fully with international financial markets. But the nineties were characterized by a spate of financial crises, afflicting many other emerging economies as well. Partly this may have reflected “contagion” (spillover effects) from the crises we have studied, such as those of Argentina in 1995, or of several East and Southeast Asian economies in 1997. But partly these emerging-economy crises have also been home-grown, for example, the Brazilian crisis of 1999. Moreover, the incidence of financial crises has not been restricted to emerging economies. Crises have also occurred among industrial countries (e.g., the Nordic banking crisis that we reviewed in Chapter 13, and the ERM crisis of 1992) as well as transition economies (the Russian crisis of 1998).

What lessons can we draw from the recent spate of financial crises in emerging economies for the central topic of this book: the conduct of domestic macroeconomic policies in emerging economies? To bring together the various themes that we have explored in this book, this chapter will attempt to summarize what we may and may not have learned about this issue from the financial turbulence of the 1990s.