Expected worsening or improving financial instability and the 2008 financial crisis

Manmohan Agarwal, Sean Walsh, Jing Wang, John Whalley and Chen Yan

The North American Journal of Economics and Finance, 2013, vol. 26, issue C, 92-105

Abstract: We focus on the external sector component of financial instability and link changes in country imbalances to GDP growth rates in ways to produce indices of expected worsening or improving financial instability at different points in time. Our results suggest that depending upon the index used and the base date chosen for comparison, different implications emerge for the linkage between external sector imbalances, perceived future instability and hence the possible onset of a financial crisis. The implication we drawn is that links between imbalances and best policy response to 2008 crisis asserted by the G20 may be more tenuous than claimed.

Keywords: External sector imbalances; Financial instability; Index approach; Financial crisis (search for similar items in EconPapers)
JEL-codes: E44 F32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:26:y:2013:i:c:p:92-105

DOI: 10.1016/j.najef.2013.07.002

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