We construct a monetary model of financial crises that can explain two characteristic features of the global financial crisis in 2008/2009, namely, the widespread freeze of asset transactions and a sharp contraction in aggregate output. We assume that the assets, such as real estate, work as...

This paper constructs a model of financial crises that can explain characteristic features of the global financial crisis of 2008-2009, namely, the widespread freezing of asset transactions, the sharp contraction of aggregate output, and a deterioration in the labor wedge. This paper assumes...

In this paper, we examine theoretically how corporate saving in emerging markets is contributing to global rebalancing. We consider a two-country dynamic general equilibrium model, based on Bacchetta and Benhima (2014), with a Developed and an Emerging country. Firms need to save in liquid...

A version of the Kiyotaki and Moore (1997) model of credit cycles is used to examine the extent to which a crisis in a country can spread to another seemingly unrelated country. The model features two small open economies that face credit constraints and produce a differentiated commodity which...

A version of the Kiyotaki and Moore (1997) model of credit cycles is used to examine the extent to which a crisis in a country can spread to another seemingly unrelated country. The model features two small open economies that face credit constraints and produce a differentiated commodity which...

Sudden stops in capital inflows were a main characteristic of the emerging market crisis during the 1990's. Concerns about them have recurred in the light of recently increased global stability risk and the quantitative easing that led to substantial capital inflows in emerging economies. We add...