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  1. Precautionary demand for foreign assets in sudden stop economies
    an assessment of the new merchantilism
    Author: Durdu, Ceyhun Bora; Mendoza, Enrique G.; Terrones, Marco E.
    Published: 2007
    Publisher:  National Bureau of Economic Research, Cambridge, Mass.

    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... more

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    W 1 (13123)
    Inter-library loan:
    Unlimited inter-library loan, copies and loan

    Location:
    ifo Institut für Wirtschaftsforschung an der Universität München, Bibliothek
    Signature:
    82/766 B-13123
    Inter-library loan:
    No inter-library loan

     

    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 defense against Sudden Stops. We conduct a quantitative assessment of this argument using a stochastic intertemporal equilibrium framework with incomplete asset markets in which precautionary saving affects foreign assets via three mechanisms: business cycle volatility, financial globalization, and Sudden Stop risk. In this framework, Sudden Stops are an equilibrium outcome produced by an endogenous credit constraint that triggers Irving Fisher's debt-deflation mechanism. Our results show that financial globalization and Sudden Stop risk are plausible explanations of the observed surge in reserves but business cycle volatility is not. In fact, business cycle volatility has declined in the post-globalization period. These results hold whether we use the formulation of intertemporal preferences of the Bewley-Aiyagari-Hugget class of precautionary savings models or the Uzawa-Epstein setup with endogenous time preference.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Print
    Series: NBER working paper series ; 13123
    Subjects: Globalisierung; Internationaler Finanzmarkt; Wirtschaftskrise; Konjunktur; Währungsreserven; Welt
    Other subjects: Array
    Scope: 27, [18] S., graph. Darst.
    Notes:

    Literaturverz. S. 26 - 27

    Internetausg.: papers.nber.org/papers/w13123.pdf - lizenzpflichtig
  2. Sudden stops in capital inflows and the design of exchange rate regimes
    Author: Ritter, Raymond
    Published: 2003
    Publisher:  HWWA, Hamburg

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