Stability periods between financial crises: The role of macroeconomic fundamentals and crises management policies

Zorobabel Bicaba (), Daniel Kapp and Francesco Molteni ()

Economic Modelling, 2014, vol. 43, issue C, 346-360

Abstract: This study aims to identify which factors explain why some countries enjoy long durations of stability, while others experience crises in shorter intervals. We analyze the duration of stability periods between currency, debt, and banking crises by employing an innovative econometric strategy, the Finite Mixture Model (FMM). Real and financial variables show high predictive power for stability spells between currency crises. Regarding debt crises, the real interest rate is observed to be the best predictor. The time between systemic financial crises appears to be prolonged through government interventions and through IMF program participation, while bank recapitalization has a negative impact.

Keywords: Financial crises; Finite mixture model; Duration; Bimodality (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Stability periods between financial crises: The role of macroeconomic fundamentals and crises management policies (2011)
Working Paper: Stability periods between financial crises: The role of macroeconomic fundamentals and crises management policies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:43:y:2014:i:c:p:346-360

DOI: 10.1016/j.econmod.2014.08.013

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