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Selective swap arrangements and the global financial crisis: Analysis and interpretation

Joshua Aizenman () and Gurnain Pasricha ()

International Review of Economics & Finance, 2010, vol. 19, issue 3, 353-365

Abstract: This paper explores the logic inducing the FED to extend unprecedented swap-lines to four emerging markets in September 2008. Exposure of US banks to EMs turned out to be the most important selection criterion for explaining the "selected four" swap-lines. This result is consistent with the outlined model. The FED swap-lines had relatively large short-run impact on the exchange rates of the selected EMs, but much smaller effect on the spreads. Yet, all the swap countries saw their exchange rate subsequently depreciate to a level lower than pre-swap rate, calling into question the long-run impact of the swap arrangements.

Keywords: Swap-lines; Deleveraging; Trade; and; financial; exposure (search for similar items in EconPapers)
Date: 2010
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Working Paper: Selective Swap Arrangements and the Global Financial Crisis: Analysis and Interpretation* (2009) Downloads
Working Paper: Selective Swap Arrangements and the Global Financial Crisis: Analysis and Interpretation (2009) Downloads
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