Carry trades and speculative manias: evidence from Central and Eastern Europe

Andreas Hoffmann

Journal of Post Keynesian Economics, 2013, vol. 36, issue 1, 15-30

Abstract: In this paper I analyze whether carry trade returns can be linked to stock market booms in Central and Eastern Europe prior to the crisis of 2007-8. Empirically, I find that from 1999 to 2009 stock markets hiked when carry trades were lucrative. Based on Minsky's "theory of financial instability" I argue that increased risk-taking via carry trades contributed to financial market exuberance in Central and Eastern Europe.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:36:y:2013:i:1:p:15-30

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DOI: 10.2753/PKE0160-3477360102

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