A model of crises in emerging markets

Michael Dooley

No 630, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper presents a \"first generation\" model of speculative attacks on emerging markets. Credit-constrained governments accumulate liquid assets in order to self-insure against shocks to national consumption. Governments also insure poorly regulated domestic financial markets. Given this policy regime, a variety of internal and external shocks generate capital inflows followed by anticipated speculative attacks. The model suggests that a common shock generated capital inflows to emerging markets in Asia and Latin America after 1989. Country-specific factors determined the timing of speculative attacks. Economic reform programs may also have generated capital inflow/crisis sequences.

Keywords: Econometric models; Banking market; Risk (search for similar items in EconPapers)
Date: 1998
New Economics Papers: this item is included in nep-ifn and nep-mon
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: A Model of Crises in Emerging Markets (2000)
Working Paper: A Model of Crises in Emerging Markets (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:630

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