Globalization and Emerging Markets: With or without Crash?
Philippe Martin and
Helene Rey
Post-Print from HAL
Abstract:
We analyze the effects of financial and trade globalization on the likelihood of financial crashes in emerging markets. While trade globalization always makes crashes less likely, financial globalization may make them more likely, especially when trade costs are high. Pessimistic expectations can be self-fulfilling and lead to a collapse in demand for goods and assets. Such a crash comes with a current account reversal and drops in income and investment. Lower-income countries are more prone to such demand-based financial crises. A quantitative evaluation shows our model is consistent with the main stylized facts of financial crashes in emerging markets.
Keywords: JEL F12; F32; F37; F41; O16 (search for similar items in EconPapers)
Date: 2006-12
References: Add references at CitEc
Citations: View citations in EconPapers (145)
Published in American Economic Review, 2006, 96 (5), pp.1631-1651. ⟨10.1257/aer.96.5.1631⟩
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
Journal Article: Globalization and Emerging Markets: With or Without Crash? (2006) 
Working Paper: Globalization and Emerging Markets: With or without Crash? (2006)
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2006) 
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2006) 
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) 
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) 
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00176903
DOI: 10.1257/aer.96.5.1631
Access Statistics for this paper
More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().