Sudden Stops And Currency Drops
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| Author | : Luis Catão |
| Publisher | : International Monetary Fund |
| Total Pages | : 66 |
| Release | : 2006-05 |
| Genre | : Business & Economics |
| ISBN | : |
This paper shows that recent manifestations of sudden stops (SSs) in international capital flows have striking parallels in the early financial globalization era preceding World War I. All main capital-importing countries then faced episodic capital flow reversals averaging some 5 percent of GDP and with a median duration of four years. Most SSs also displayed striking crosscountry synchronization, being immediately preceded by rising world interest rates. Both fixed and floating exchange rate regimes were hit, with no significant differences between them. Yet, not all SSs resulted in currency drops: while some countries experienced currency collapses, others managed to preserve exchange rate stability. These different responses are related to domestic "frictions" that heightened the procyclicality of absorption and hindered precautionary reserve accumulation in some countries relative to others.
| 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 | : Sebastian Edwards |
| Publisher | : University of Chicago Press |
| Total Pages | : 782 |
| Release | : 2002-11-15 |
| Genre | : Business & Economics |
| ISBN | : 9780226184944 |
Economists and policymakers are still trying to understand the lessons recent financial crises in Asia and other emerging market countries hold for the future of the global financial system. In this timely and important volume, distinguished academics, officials in multilateral organizations, and public and private sector economists explore the causes of and effective policy responses to international currency crises. Topics covered include exchange rate regimes, contagion (transmission of currency crises across countries), the current account of the balance of payments, the role of private sector investors and of speculators, the reaction of the official sector (including the multilaterals), capital controls, bank supervision and weaknesses, and the roles of cronyism, corruption, and large players (including hedge funds). Ably balancing detailed case studies, cross-country comparisons, and theoretical concerns, this book will make a major contribution to ongoing efforts to understand and prevent international currency crises.
| Author | : Eduardo Levy Yeyati |
| Publisher | : MIT Press |
| Total Pages | : 364 |
| Release | : 2003 |
| Genre | : Business & Economics |
| ISBN | : 9780262122504 |
Theoretical and empirical analysis of de jure dollarization. With the persistent instability of international financial markets, emerging economies are exploring new ways to reduce exposure to capital flow volatility. Some analysts argue that financially open economies are best served by more flexible regimes, while others argue in favor of extreme exchange rate regimes that have a strong commitment to a fixed parity or dispense with an independent currency. The successful launch of the euro has made more realistic the prospect of replacing a national currency with a strong foreign one. Recent examples include the adoption of the US dollar by Ecuador and El Salvador. The introduction of a foreign currency as sole legal tender, termed full (de jure) dollarization, has been the center of much political and academic debate. This book provides a comprehensive analysis of the issues from both theoretical and empirical perspectives. The topics discussed include the role of balance sheet effects, the linkage between currency risk and country risk, the impact of dollarization on trade, financial integration and credibility, the implications of dollarization for the lender of last resort, and the institutional and political economy aspects of dollarization.
| Author | : Barry Eichengreen |
| Publisher | : University of Chicago Press |
| Total Pages | : 306 |
| Release | : 2010-04-15 |
| Genre | : Business & Economics |
| ISBN | : 0226194574 |
Recent crises in emerging markets have been heavily driven by balance-sheet or net-worth effects. Episodes in countries as far-flung as Indonesia and Argentina have shown that exchange rate adjustments that would normally help to restore balance can be destabilizing, even catastrophic, for countries whose debts are denominated in foreign currencies. Many economists instinctually assume that developing countries allow their foreign debts to be denominated in dollars, yen, or euros because they simply don't know better. Presenting evidence that even emerging markets with strong policies and institutions experience this problem, Other People's Money recognizes that the situation must be attributed to more than ignorance. Instead, the contributors suggest that the problem is linked to the operation of international financial markets, which prevent countries from borrowing in their own currencies. A comprehensive analysis of the sources of this problem and its consequences, Other People's Money takes the study one step further, proposing a solution that would involve having the World Bank and regional development banks themselves borrow and lend in emerging market currencies.
| Author | : Mr.Stijn Claessens |
| Publisher | : International Monetary Fund |
| Total Pages | : 670 |
| Release | : 2014-02-19 |
| Genre | : Business & Economics |
| ISBN | : 1475543409 |
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.
| Author | : Sebastian Edwards |
| Publisher | : University of Chicago Press |
| Total Pages | : 427 |
| Release | : 2009-02-15 |
| Genre | : Business & Economics |
| ISBN | : 0226185036 |
Latin America’s economic performance is mediocre at best, despite abundant natural resources and flourishing neighbors to the north. The perplexing question of how some of the wealthiest nations in the world in the nineteenth century are now the most crisis-prone has long puzzled economists and historians. The Decline of Latin American Economies examines the reality behind the struggling economies of Argentina, Chile, and Mexico. A distinguished panel of experts argues here that slow growth, rampant protectionism, and rising inflation plagued Latin America for years, where corrupt institutions and political unrest undermined the financial outlook of already besieged economies. Tracing Latin America’s growth and decline through two centuries, this volume illustrates how a once-prosperous continent now lags behind. Of interest to scholars and policymakers alike, it offers new insight into the relationship between political systems and economic development.
| Author | : Mr.Gian Milesi-Ferretti |
| Publisher | : International Monetary Fund |
| Total Pages | : 45 |
| Release | : 1998-06-01 |
| Genre | : Business & Economics |
| ISBN | : 1451952422 |
This paper studies large reductions in current account deficits and exchange rate depreciations in low- and middle-income countries. It examines which factors help predict the occurrence of a reversal or a currency crisis, and how these events affect macroeconomic performance. Both domestic factors, such as the low reserves, and external factors, such as unfavorable terms of trade, are found to trigger reversals and currency crises. The two types of events are, however, distinct; an exchange rate crash is associated with a fall in output growth and a recovery thereafter, while for reversals there is no systematic evidence of a growth slowdown.
| Author | : Gerard Caprio |
| Publisher | : Cambridge University Press |
| Total Pages | : 320 |
| Release | : 2001-10-08 |
| Genre | : Business & Economics |
| ISBN | : 0521803691 |
This volume provides a rounded view of financial liberalization after the collapses in East Asia.
| Author | : Giovanni Piersanti |
| Publisher | : Oxford University Press |
| Total Pages | : 407 |
| Release | : 2012-04-26 |
| Genre | : Business & Economics |
| ISBN | : 0199653127 |
An overview of the causes and consequences of speculative attacks on domestic currency and international financial turmoil. It provides a comprehensive treatment of the existing theories of exchange rate crises and of financial market runs.
