Sudden Stops And Output Drops
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Sudden Stops And Output Drops
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Author : V. V. Chari
language : en
Publisher:
Release Date : 2005
Sudden Stops And Output Drops written by V. V. Chari and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Capital movements categories.
"In recent financial crises and in recent theoretical studies of them, abrupt declines in capital inflows, or sudden stops, have been linked with large drops in output.Do sudden stops cause output drops? No, according to a standard equilibrium model in which sudden stops are generated by an abrupt tightening of a country's collateral constraint on foreign borrowing.In this model, in fact, sudden stops lead to output increases, not decreases.An examination of the quantitative effects of a well-known sudden stop, in Mexico in the mid-1990s, confirms that a drop in output accompanying a sudden stop cannot be accounted for by the sudden stop alone.To generate an output drop during a financial crisis, as other studies have done, the model must include other economic frictions which have negative effects on output large enough to overwhelm the positive effect of the sudden stop"--Federal Reserve Bank of Minneapolis web site.
Sudden Stops And Output Drops
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Author : Suparna Chakraborty
language : en
Publisher:
Release Date : 2013
Sudden Stops And Output Drops written by Suparna Chakraborty and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Empirical literature overwhelmingly suggest that sudden stops lead to output drops. Can general equilibrium theory predict this link or is it theoretically impossible for sudden stops to generate output drops by themselves as other studies suggest? In this paper we contend that the answer depends on the response of labor to a sudden stop which in turn depends on the type of preference specification used. To this end, we use a small open economy model where agents face a constraint on foreign borrowing and a sudden stop occurs due to an abrupt tightening of the borrowing constraint. We find that under Cobb-Douglas preferences, the dominant wealth e¤ect of a sudden stop leads to labor increases which in turn generates an output increase as opposed to a drop! In contrast, under GHH preferences that by construction eliminate the wealth effect, a sudden stop leads to declines in future capital and labor supply leading to drops in output. We find empirical support of our conclusion in data from a sample of emerging economies where labor declined significantly in the aftermath of a sudden stop.
Sudden Stops Output Drops And Credit Collapses
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Author : Jihad Dagher
language : en
Publisher:
Release Date : 2004-12-31
Sudden Stops Output Drops And Credit Collapses written by Jihad Dagher and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-12-31 with categories.
This paper proposes a tractable Sudden Stop model to explain the main patterns in firm level data in a sample of Southeast Asian firms during the Asian crisis. The model, which features trend shocks and financial frictions, is able to generate the main patterns observed in the sample during and following the Asian crisis, including the ensuing credit-less recovery, which are also patterns broadly shared by most Sudden Stop episodes as documented in Calvo et al. (2006). The model also proposes a novel explanation as to why small firms experience steeper declines than their larger peers as documented in this paper. This size effect is generated under the assumption that small firms are growth firms, to which there is support in the data. Trend shocks when combined with financial frictions in this model also generate strong leverage effects in line with what is observed in the sample, and with other observations from the literature.
Output Drops And The Shocks That Matter
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Author : Torbjörn Becker
language : en
Publisher: International Monetary Fund
Release Date : 2006-07
Output Drops And The Shocks That Matter written by Torbjörn Becker 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 2006-07 with Business & Economics categories.
Output drops are usually associated with major disruption for the residents of affected countries, both directly and often through ensuing, prolonged growth slowdowns. Using a century of data, we document that output drops are more frequent in countries at a lower stage of economic development. We then turn to a more in-depth analysis of the post-1970 era, examining output drops in a large panel of countries, and systematically relating them to a variety of shocks. We compute the expected cost of each type of shock as a function of the shock's frequency, the likelihood that the shock will be associated with a drop in output, and the size of the output drop. The largest costs are associated with external financial shocks (notably, sudden stops in financial flows) for emerging markets, and with real external shocks (in particular, terms-of-trade shocks) for developing countries.
Sudden Stops And Currency Drops
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Author : Luis Catão
language : en
Publisher: International Monetary Fund
Release Date : 2006-05
Sudden Stops And Currency Drops written by Luis Catão 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 2006-05 with Business & Economics categories.
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.
Financial Crises
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Author : Mr.Stijn Claessens
language : en
Publisher: International Monetary Fund
Release Date : 2014-02-19
Financial Crises written by Mr.Stijn Claessens 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 2014-02-19 with Business & Economics categories.
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.
The Evidence And Impact Of Financial Globalization
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Author : Gerard Caprio
language : en
Publisher: Academic Press
Release Date : 2012-11-27
The Evidence And Impact Of Financial Globalization written by Gerard Caprio and has been published by Academic Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-11-27 with Business & Economics categories.
The sharp realities of financial globalization become clear during crises, when winners and losers emerge. Crises usher in short- and long-term changes to the status quo, and everyone agrees that learning from crises is a top priority. The Evidence and Impact of Financial Globalization devotes separate articles to specific crises, the conditions that cause them, and the longstanding arrangements devised to address them. While other books and journal articles treat these subjects in isolation, this volume presents a wide-ranging, consistent, yet varied specificity. Substantial, authoritative, and useful, these articles provide material unavailable elsewhere. Substantial articles by top scholars sets this volume apart from other information sources Rapidly developing subjects will interest readers well into the future Reader demand and lack of competitors underline the high value of these reference works
Sudden Stop Financial Factors And Economic Collapse In Latin America
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Author : Guillermo Calvo
language : en
Publisher:
Release Date : 2005
Sudden Stop Financial Factors And Economic Collapse In Latin America written by Guillermo Calvo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Argentina categories.
"This paper shows that the Russian 1998 crisis had a big impact on capital flows to Emerging Market Economies, EMs, especially in Latin America, and that the impact of the Russian shock differs quite markedly across EMs. To illustrate this statement, we compare the polar cases of Chile and Argentina. While Chile exhibited a significant economic slowdown after August 1998, it did not suffer the excruciating collapse suffered by Argentina, where even the payments system came to a full stop. We attribute their difference to the fact that Chile is more open to trade than Argentina, and that it appears to suffer much less from balance-sheet currency-denomination mismatch that was rampant in Argentina before the 2002 crisis (due to large domestic liability dollarization). The paper is essentially descriptive but is in line with and, thus, complements econometric studies like Calvo, Izquierdo and Mejia (NBER Working Paper 10520). The final section addresses policy issues in light of the paper's findings and conjectures"--NBER website
Economic Growth
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Author : Tai-Yoo Kim
language : en
Publisher: Springer Science & Business Media
Release Date : 2013-11-29
Economic Growth written by Tai-Yoo Kim and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-11-29 with Business & Economics categories.
This book shows that the existing theories on economic growth have clear limitations in terms of how much they can effectively contribute to actual economic growth. Therefore, this book presents a more effective theory on economic growth for countries and leaders looking to promote economic growth. It is essentially centered around the theory of economic growth and theory of national development, written for agricultural developing countries pursuing industrialization and late-starting industrialized countries pursuing their own development. Nevertheless, it also makes a significant contribution to the very development of human civilization through the growth of developing countries, late-starting industrialized countries and early industrialized countries throughout the world.
Capital Controls Sudden Stops And Current Account Reversals
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Author : Sebastian Edwards
language : en
Publisher:
Release Date : 2005
Capital Controls Sudden Stops And Current Account Reversals written by Sebastian Edwards and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Monetary policy categories.
Finds that although there is no relationship between capital mobility and the likelihood of a country experiencing an economic recession, countries with high mobility will experience a greater decline in economic growth if a crisis does occur.