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International capital flows and transmission of financial crises

Aditya Goenka () and Melisso Boschi ()

No 785, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: This paper proposes a model encompassing alternative views of contagion by highlighting the different channels of transmission of financial crises in an unifying framework. We study investor behaviour when they are affected by external habit formation. It is shown how international portfolio choice in frictionless financial markets with habit formation is in itself a channel of contagion. The possible stabilization effects of capital controls and Tobin tax on the international transmission of financial crises are also discussed

Keywords: Currency crises; contagion; habit formation; portfolio rebalancing; capital controls; Tobin tax (search for similar items in EconPapers)
JEL-codes: F31 F32 G15 G11 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-ifn
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http://repec.org/esFEAM04/up.3558.1082346861.pdf (application/pdf)

Related works:
Working Paper: RELATIVE RISK AVERSION AND THE TRANSMISSION OF FINANCIAL CRISES (2007) Downloads
Working Paper: Habit formation and the transmission of financial crises (2006) Downloads
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