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changing demands for modern central bank interventions in the economy. Financial instability, followed by WWII, left a world …
Persistent link: https://www.econbiz.de/10012455241
While the 2008-2009 financial crisis originated in the United States, we witnessed steep declines in output, consumption and investment of similar magnitudes around the globe. This raises two questions. First, given the observed strong home bias in goods and financial markets, what can account...
Persistent link: https://www.econbiz.de/10012459599
The recent crisis highlighted the importance of globally active banks in linking markets. One channel for this linkage is through how these banks manage liquidity across their entire banking organization. We document that funds regularly flow between parent banks and their affiliates in diverse...
Persistent link: https://www.econbiz.de/10012461303
We argue that allowing for the possibility of a self-fulfilling panic helps in understanding several features of the recent Mexican crisis. Self-fulfilling expectations became decisive in generating a panic only after the government ran down gross reserves and ran up short-term dollar debt. We...
Persistent link: https://www.econbiz.de/10012473285
Existing models of contagious currency crises are summarized and surveyed, and it is argued that more weight should be put on political factors. Towards this end, the concept of political contagion introduced, whereby contagion in speculative attacks across currencies arises solely because of...
Persistent link: https://www.econbiz.de/10012471578
This paper provides an asymmetric information framework for understanding the nature of financial crises. It provides the following precise definition of a financial crisis: A financial crisis is a disruption to financial markets in which adverse selection and moral hazard problems become much...
Persistent link: https://www.econbiz.de/10012475050
We study the impact of economic crisis on health in Mexico. There have been four wide-scale economic crises in Mexico …
Persistent link: https://www.econbiz.de/10012471004
Financial globalization was off to a rocky start in emerging economies hit by Sudden Stops since the mid 1990s. Foreign reserves grew very rapidly during this period, and hence it is often argued that we live in the era of a New Merchantilism in which large stocks of reserves are a war-chest for...
Persistent link: https://www.econbiz.de/10012465531
This paper asks how recent developments in research on banking and sovereign lending can help inform the debate on choosing a new international financial architecture. A broad range of plans is considered, including a global lender of last resort facility, an international bankruptcy court, an...
Persistent link: https://www.econbiz.de/10012471525
In this paper, we study the interplay between sovereign risk and global financial risk. We show that a substantial portion of the comovement among sovereign spreads is accounted for by changes in global financial risk. We construct bond-level sovereign spreads for dollar-denominated bonds issued...
Persistent link: https://www.econbiz.de/10012696410