Capital Flows and Financial Crises
نویسنده
چکیده
This paper suggests, first, that a simple theoretical framework is useful in explaining financial crises in emerging economies. Second, it reviews the East Asian financial crises of 1997-98 . Third, the paper examines the origins of Argentina’s crisis of 2001-02. Fourth, it presents a comparative analysis of both crises, highlighting their similarities and differences. Finally, the conclusions point out the drawbacks of both hard and soft pegs respective to a single foreign currency as well as the need for emerging economies to use capital controls in order to avoid the recurrence of financial crises.
منابع مشابه
Capital Flows, Output Volatility, and Financial Crises in Emerging Markets
The surge in capital flows towards emerging market countries is one of the major developments in the world economy in the 1990s. In particular, short-term flows, in the form of portfolio investments or bank loans, have grown at an extremely rapid pace. At the same time, emerging markets have experienced an increasing number of financial crises, with dire consequences. It is increasingly argued ...
متن کاملHow do Sudden Stops of Capital Flows Affect Currency Crises in Asia?
Sudden stops can be characterized by sharp reversals in capital inflows, large declines in output, and steep collapses in real asset prices (Mendoza and Smith, 2009). In almost all recent crises, capital account reversals amounting to more than 10% of an afflicted country’s GDP have occurred (Calvo and Reinhart, 1999 and Nabli, 1999). More specifically, reversals in capital flows to emergin...
متن کاملBanks , Capital Flows and Financial Crises
This paper proposes a macroeconomic model with financial intermediaries (banks), in which banks face occasionally binding leverage constraints and may endogenously affect the strength of their balance sheets by issuing new equity. The model can account for occasional financial crises as a result of the nonlinearity induced by the constraint. Banks’ precautionary equity issuance makes financial ...
متن کاملCapital Account Liberalization, Free Long-term Capital Flows, Financial Crises and Economic Development
The main objective of this paper is to review the theoretical issues and available empirical evidence on capital account liberalization. In addition to being of interest in its own right, capital account liberalizations is important to the debate on the New International Financial Architecture (NIFA) and to the post-Doha agenda at the World Trade Organization (WTO) in relation to foreign direct...
متن کاملDiscussion on “gross capital flows Dynamics and crises” by Broner, Didier, Erce, and Schmukler
International capital flows have always been an important topic in international economics. Capital flows help a country exploit better investment opportunity and smooth consumption. Over the past few years, global current account imbalances have been at the forefront of policy debates. Large amount of research devotes to the study of net capital flows, while fewer works put their focus on gros...
متن کامل