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Persistent link: https://www.econbiz.de/10013423557
This paper explores the role played by government guarantees to banks’ foreigncreditors as a root cause of self-fulfilling twin banking-currency crises. We developa general equilibrium model in which such guarantees lead to these types of crises.Absent government guarantees, such crises are...
Persistent link: https://www.econbiz.de/10009475583
This paper argues that the recen Southeast Asian currency crisis was caused by large prospective deficits associated with implicit bailout guarantees to failing banking systems. We articulate this view using a simple dynamic general equilibrium model whose key feature is that a speculativ attack...
Persistent link: https://www.econbiz.de/10009475593
Persistent link: https://www.econbiz.de/10010420891
This article reviews and interprets the recent currency crises in Korea and Thailand. The authors argue that a prime causes of the crises were large, unfunded government guarantees to railing financial sectors.
Persistent link: https://www.econbiz.de/10005499169
This paper argues that the recent Southeast Asian currency crisis was caused by large prospective deficits associated with implicit bailout guarantees to failing banking systems. We articulate this view using a simple dynamic general equilibrium model whose key feature is that a speculative...
Persistent link: https://www.econbiz.de/10005419937
Currency crises that coincide with banking crises tend to share four elements. First, governments provide guarantees to domestic and foreign bank creditors. Second, banks do not hedge their exchange rate risk. Third, there is a lending boom before the crises. Finally, when the currency/banking...
Persistent link: https://www.econbiz.de/10005419946
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Some booms in housing prices are followed by busts. Others are not. In either case it is difficult to find observable fundamentals that are correlated with price movements. We develop a model consistent with these observations. Agents have heterogeneous expectations about long-run fundamentals...
Persistent link: https://www.econbiz.de/10011080199