On Domestic Financial Market Frictions, Unrestricted International Capital Flows, and Crises in Small Open Economies
Author | : Gaetano Antinolfi |
Publisher | : |
Total Pages | : 70 |
Release | : 1998 |
Genre | : Foreign exchange rates |
ISBN | : |
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Author | : Gaetano Antinolfi |
Publisher | : |
Total Pages | : 70 |
Release | : 1998 |
Genre | : Foreign exchange rates |
ISBN | : |
Author | : Stephany Griffith-Jones |
Publisher | : OUP Oxford |
Total Pages | : 325 |
Release | : 2001-02-01 |
Genre | : Business & Economics |
ISBN | : 0191589144 |
The currency crises that engulfed East Asian economies in 1997 and Mexico in 1994 - and their high development costs - raise a serious concern about the net benefits for developing countries of large flows of potentially reversible short-term international capital. Written by senior policy-makers and academics, the contributions to this volume examine in depth the macroeconomic and other policy dilemmas confronting public authorities in the emerging economies as they deal with short-term capital movements, especially in the period before the outbreak of these crises. The studies are based on comparative case studies of key emerging economies. Valuable insights are also derived from contrasts between the East Asian, Latin American, African, and European experiences, between the financial and real effects of financial flows, and between private and public responsibilities in managing financial markets. The great value of the chapters in this volume is that they analytically identify the weaknesses in both domestic and international capital market regimes. The recommendations derived from this analysis apply to the development of financial markets in developing countries, the monitoring and regulation of mutual funds in source countries, and the future development of international capital markets. They will make an important contribution both to the discussion of national policies and of a new international financial architechture.
Author | : Elisabeth Huybens |
Publisher | : |
Total Pages | : 60 |
Release | : 1996 |
Genre | : Capital investments |
ISBN | : |
Author | : |
Publisher | : |
Total Pages | : 32 |
Release | : 2010 |
Genre | : |
ISBN | : |
The financial crisis of 2007-08 has underscored the importance of adverse selection in financial markets. This friction has been mostly neglected by macroeconomic models of financial frictions, however, which have focused almost exclusively on the effects of limited pledgeability. In this paper, we fill this gap by developing a standard growth model with adverse selection. Our main results are that, by fostering unproductive investment, adverse selection: (i) leads to an increase in the economy's equilibrium interest rate, and; (ii) it enerates a negative wedge between the marginal return to investment and the equilibrium interest rate. Under financial integration, we show how this translates into excessive capital inflows and endogenous cycles. We also explore how these results change when limited pledgeability is added to the model. We conclude that both frictions complement one another and argue that limited pledgeability exacerbates the effects of adverse selection.
Author | : Philippe Aghion |
Publisher | : |
Total Pages | : 68 |
Release | : 1999 |
Genre | : Business cycles |
ISBN | : |
Author | : Michael I. Obadan |
Publisher | : National Centre for Economic Management |
Total Pages | : 86 |
Release | : 1999 |
Genre | : Capital movements |
ISBN | : |
Author | : Mr.Stijn Claessens |
Publisher | : International Monetary Fund |
Total Pages | : 66 |
Release | : 2013-01-30 |
Genre | : Business & Economics |
ISBN | : 1475561008 |
This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.
Author | : Paolo Cavallino |
Publisher | : |
Total Pages | : 71 |
Release | : 2017 |
Genre | : |
ISBN | : |
Abstract I consider a small open economy model where international financial markets are imperfect and the exchange rate is determined by capital flows. I use this framework to study the effects of portfolio flow shocks, derive the optimal foreign exchange intervention policy, and characterize its interaction with monetary policy. I derive the optimal intervention rule in closed form as a function of three implicit targets. Finally, using Swiss data I provide evidence of the inefficiencies generated by capital flow shocks and quantify them by estimating the financial market friction that determines deviations from uncovered interest rate parity.
Author | : Gabriele Camera |
Publisher | : Springer Science & Business Media |
Total Pages | : 268 |
Release | : 2006-01-09 |
Genre | : Business & Economics |
ISBN | : 3540295003 |
Assembles theoretical contributions to monetary theory, banking and finance. This book includes papers spanning themes from monetary policy to the optimal design of financial systems, and from the study of the causes of financial crises to payment systems design. It serves as a reference to researchers interested in the study of financial systems.
Author | : Mr.Stijn Claessens |
Publisher | : International Monetary Fund |
Total Pages | : 754 |
Release | : 2014-02-19 |
Genre | : Business & Economics |
ISBN | : 1484355261 |
The lingering effects of the economic crisis are still visible—this shows a clear need to improve our understanding of financial crises. This book surveys a wide range of crises, including banking, balance of payments, and sovereign debt crises. It begins with an overview of the various types of crises and introduces a comprehensive database of crises. Broad lessons on crisis prevention and management, as well as the short-term economic effects of crises, recessions, and recoveries, are discussed.