Fourteenth Annual Conference on Macroeconomics.

• Position: National Bureau of Economic Research meeting

The NBER held its Fourteenth Annual Conference on Macroeconomics in Cambridge on March 26 and 27. The conference was organized by Ben S. Bernanke, NBER and Princeton University, and Julio J. Rotemberg, NBER and Harvard University. The following papers were presented and discussed:

Roberto Chang, Federal Reserve Bank of Atlanta, and Andres Velasco, NBER and New York University, "Illiquidity and Crises in Emerging Markets: Theory and Policy"

Discussants: Abhijit Banerjee, MIT, and Nouriel Roubini, President's Council of Economic Advisers Michael L. Mussa and Miguel Savastano, International Monetary Fund, "The IMF Approach to Economic Stabilization"

Discussants: Martin S. Eichenbaum, NBER and Northwestern University, and Sebastian Edwards, NBER and University of California, Los Angeles Takeo Hoshi, University of California, San Diego, and Anil K Kashyap, NBER and University of Chicago, "The Japanese Banking Crisis: Where Did It Come from and Where Will It End?"

Discussants: Michael Hutchison, University, of California, Santa Cruz, and Mark Gertler, NBER and New York University

Jonathan C. Heaton and Deborah J. Lucas, NBER and Northwestern University, "Stock Prices and Fundamentals"

Discussants: Annette Vissing-Jorgenson, University of Chicago, and John Y. Campbell, NBER and Harvard University

Fernando Alvarez, University of Chicago, and Marcelo Veracierto, Federal Reserve Bank of Chicago, "Equilibrium Search and Labor Market Policies"

Discussants: Giuseppe Moscarini, Yale University, and Alan B. Krueger, NBER and Princeton University

Jonathan A. Parker, University of Wisconsin, "Spendthrift in America" Discussants: David Laibson, NBER and Harvard University, and Anna Maria Lusardi, University of Chicago

Chang and Velasco focus on one factor behind financial and currency distress: international illiquidity, the situation in which a country's consolidated financial system has potential short-term obligations in foreign currency that exceed the amount of foreign currency it can access on short notice. Stressing the role of domestic banks, the authors argue that international illiquidity is what the very diverse recent crises in emerging markets have in common. Using a bank in a small, open economy with limited access to international capital as a model, the authors then study the role of capital inflows and the maturity of external debt, how real exchange rate depreciation can transmit and magnify the effects of bank illiquidity, options for...