Boom Bust Cycles And Financial Liberalization
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Boom Bust Cycles And Financial Liberalization
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Author : Aaron Tornell
language : en
Publisher: MIT Press
Release Date : 2005
Boom Bust Cycles And Financial Liberalization written by Aaron Tornell and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Credit categories.
Analysis and evidence of how the factors that give rise to boom-bust cycles in fast-growing developing economies also enhance long-run growth. The volatility that has hit many middle-income countries (MICs) after liberalizing their financial markets has prompted critics to call for new policies to stabilize these boom-bust cycles. But, as Aaron Tornell and Frank Westermann point out in this book, over the last two decades most of the developing countries that have experienced lending booms and busts have also exhibited the fastest growth among MICs. Countries with more stable credit growth, by contrast, have exhibited, on average, lower growth rates. Factors that contribute to financial fragility thus appear, paradoxically, to be a source of long-run growth as well. Tornell and Westermann analyze boom-bust cycles in the developing world and discuss how these cycles are generated by credit market imperfections. They explain why the financial liberalization that allows countries to overcome imperfections impeding rapid growth also generates the financial fragility that leads to greater volatility and occasional crises. The conceptual framework they present illustrates this linkage and allows Tornell and Westermann to address normative questions regarding liberalization policies.The authors also characterize key macroeconomic regularities observed across MICs, showing that credit markets play a key role not only in boom-bust episodes but in the strong "credit channel" observed during tranquil times. A theoretical framework is then presented that explains how credit market imperfections can account for these empirical patterns. Finally, Tornell and Westermann provide microeconomic evidence on the credit market imperfections that drive the results of the theoretical framework, finding that asymmetries between tradables and nontradables are key to understanding the patterns in MIC data.
Short Run Pain Long Run Gain
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Author : Mr.Sergio L. Schmukler
language : en
Publisher: International Monetary Fund
Release Date : 2003-02-01
Short Run Pain Long Run Gain written by Mr.Sergio L. Schmukler and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-02-01 with Business & Economics categories.
We examine the short- and long-run effects of financial liberalization on capital markets. To do so, we construct a new comprehensive chronology of financial liberalization in 28 mature and emerging market economies since 1973. We also construct an algorithm to identify booms and busts in stock market prices. Our results indicate that financial liberalization is followed by more pronounced boom-bust cycles in the short run. However, financial liberalization leads to more stable markets in the long run. Finally, we analyze the sequencing of liberalization and institutional reforms to understand the contrasting short- and long-run effects of liberalization.
Boom Bust Cycles In Middle Income Countries
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Author : Aaron Tornell
language : en
Publisher:
Release Date : 2002
Boom Bust Cycles In Middle Income Countries written by Aaron Tornell and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Business cycles categories.
In this paper we characterize empirically the comovements of macro variables typically observed in middle income countries, as well as the boom-bust cycle' that has been observed during the last two decades. We find that many countries that have liberalized their financial markets, have witnessed the development of lending booms. Most of the time the boom gradually decelerates. But sometimes the boom ends in twin currency and banking crises, and is followed by a protracted credit crunch that outlives a short-lived recession. We also find that during lending booms there is a real appreciation and the nontradables (N) sector grows faster than the tradables (T) sector. Meanwhile, the opposite is true in the aftermath of crisis. We argue that these comovements are generated by the interaction of two characteristics of financing typical of middle income countries: risky currency mismatch and asymmetric financing opportunities across the N- and T-sectors.
Liberalization Financial Instability And Economic Development
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Author : Yılmaz Akyüz
language : en
Publisher: Anthem Press
Release Date : 2014-05-01
Liberalization Financial Instability And Economic Development written by Yılmaz Akyüz and has been published by Anthem Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-05-01 with Business & Economics categories.
Weighing up the costs and benefits of economic interdependence in a finance-driven world, this book argues that globalization, understood and promoted as absolute freedom for all forms of capital, has been oversold to the Global South, and that the South should be as selective about globalization as the North. ‘Liberalization, Financial Instability and Economic Development’ challenges the orthodoxy on the link between financial deepening and economic growth, as well as that between the efficiency of financial markets and the benefits of liberalization. Ultimately, the author urges developing countries to control capital flows and asset bubbles, preventing financial fragility and crises, and recommends regional policy options for managing capital flows and exchange rates.
Curbing The Boom Bust Cycle Stabilizing Capital Flows To Emerging Markets
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Author : Williamson, John
language : en
Publisher: Peterson Institute
Release Date : 2005
Curbing The Boom Bust Cycle Stabilizing Capital Flows To Emerging Markets written by Williamson, John and has been published by Peterson Institute this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
Macrofinancial Linkages
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Author : Mr.Christopher W. Crowe
language : en
Publisher: International Monetary Fund
Release Date : 2010-08-25
Macrofinancial Linkages written by Mr.Christopher W. Crowe and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-08-25 with Business & Economics categories.
Macrofinancial linkages have long been at the core of the IMF's mandate to oversee the stability of the global financial system. With the advent of the economic crisis, the Fund has drawn on this research in order to contribute to critical debates on the nature of appropriate policy responses at both the national and multilateral levels. The current juncture offers a good opportunity to take stock of this body of research by IMF staff and to share it with a wider audience, particularly since few collections have been published in this area. This volume brings together some of the best writing by IMF economists on macrofinancial issues, and highlights the issues and approaches that have guided IMF thinking in an area that makes up an increasingly important component of the IMF's overall remit. The chapters in the volume fit into three broad themes: financial crises and boom-bust cycles; financial integration, financial liberalization, and economic performance; and policy issues relating to macroeconomic policy and the corporate and financial sectors-including domestic and external financial liberalization.
The Nordic Banking Crises Pitfalls In Financial Liberalization
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Author : International Monetary Fund
language : en
Publisher:
Release Date : 1998
The Nordic Banking Crises Pitfalls In Financial Liberalization written by International Monetary Fund and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with categories.
Degregulation, boom-bust, cycles, restructuring.
The Positive Link Between Financial Liberalization Growth And Crises
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Author : Aaron Tornell
language : en
Publisher:
Release Date : 2004
The Positive Link Between Financial Liberalization Growth And Crises written by Aaron Tornell and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Capital market categories.
"There is no agreement regarding the growth-enhancing effects of financial liberalization, mainly because it is associated with risky international bank flows, lending booms, and crises. In this paper we make the case for liberalization despite the occurrence of crises. We show that in developing countries trade liberalization has typically been followed by financial liberalization, which has indeed led to financial fragility and a greater incidence of crises. However, financial liberalization also has led to higher GDP growth. In fact, the fastest-growing countries are typically those that have experienced boom-bust cycles. That is, there is a positive link between GDP growth and the bumpiness of credit, which is captured by the negative skewness --not by the variance-- of credit growth. To substantiate our interpretation of the data we present a model that shows why in countries with severe credit market imperfections, liberalization leads to higher growth and, as a byproduct, to financial fragility. Thus, occasional crises need not forestall growth and may even be a necessary component of a developing country's growth experience. Finally, our analysis indicates that foreign direct investment does not obviate the need for risky international bank flows, as the latter are the only source of financing for most firms in the nontradables sector"--NBER website
The Great Financial Crisis In Finland And Sweden
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Author : Lars Jonung
language : en
Publisher: Edward Elgar Publishing
Release Date : 2009-01-01
The Great Financial Crisis In Finland And Sweden written by Lars Jonung and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-01-01 with Business & Economics categories.
The Nordic financial crisis had it all: a botched liberalization, a huge boom followed by an even bigger bust, massive taxpayer-financed bailouts and, finally, deep long-run gains. The first-class team of scholars mobilized in this book convincingly tell a story that should be carefully studied by economists, bankers and policymakers. After this book, no one should be able to say: If we only knew ! Charles Wyplosz, Graduate Institute of International Studies, Geneva, Switzerland The financial crisis in Scandinavia in the early 1990s was a forerunner of the later world-wide crisis in 2007/8. Although the initial causation was different, the impact on their banks, though more localised, was just as severe. So we can benefit, and already policymakers have done so, from learning the lessons in this book on how to restore shattered banking systems to health. For this we owe a debt of gratitude to the editors, who have put together a series of key papers that emerged from a much larger exercise on the crisis that was earlier reported in four volumes in Swedish and Finnish. Amongst the many studies on current and past financial crises, this is a classic must-read . Charles A.E. Goodhart, London School of Economics, UK The Nordic experience with financial crisis resolution could not be more timely. Everyone cites it as an example of how it should be done , but rarely does one find careful and detailed analysis. Now policymakers and others searching for guidance will know where to look. Barry Eichengreen, University of California, Berkeley, US Following World War II, Nordic countries were commonly regarded as successful and stable economies. This perception was, however, shattered in the early 1990s when Finland and Sweden encountered severe financial crises. Here, the authors explore the symptoms of financial crisis decreasing real income, soaring unemployment and exploding public deficits and their devastating effects. The book compares and contrasts the experiences of Finland and Sweden, then adopts an international perspective, encompassing the experiences of Asia, Latin America, Denmark and Norway. Lessons from the 1990s crisis are drawn, and possible solutions prescribed. The conclusion is that long-term effects of financial crises financial liberalization and integration are not as dramatic as the short-term effects, but may prove to be of greater importance over time. Only the future will show whether these long-term benefits will balance or even outweigh the enormous short-term costs of the crises. Highly relevant to the current international financial crisis currently afflicting the world economy, this timely book will prove invaluable to economists and other social scientists with a general interest in financial crises, and to those with a more specific interest in the evolution and models of Scandinavian economies.
Financial Instability
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Author : V. D'Apice
language : en
Publisher: Springer
Release Date : 2016-04-30
Financial Instability written by V. D'Apice and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-04-30 with Business & Economics categories.
This book explains what is behind the wave of increasingly frequent and severe financial crises since the 1980s. It links theoretical and policy misconceptions to explain, in plain words, why and how global finance needs fixing. Otherwise, the world may not withstand the next, even bigger, financial crisis.