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Consequences of Asset Shortages in Emerging Markets

Patrick Imam and Jiaqian Chen

No 2012/102, IMF Working Papers from International Monetary Fund

Abstract: We assess econometrically the impact of asset shortages on economic growth, asset bubbles, the probability of a crisis, and the current account for a group of 41 Emerging markets for 1995-2008. The econometric estimations confirm that asset shortages pose a serious danger to EMs in terms of reducing economic growth, raising the probability of a crisis, and leading to asset price bubbles. Moreover, asset shortages can also explain the current account positions of EMs. The findings suggest that the consequences of asset shortages for macroeconomic stability are significant, and must be tackled urgently. We conclude with policy implications.

Keywords: WP; asset shortage; current account; exchange rate; fixed income; Emerging Market; Crisis; Asset Bubble; accounts receivable; rising prices; EMs' inability; asset shortage index; private equity; interest rates in EMs; market fundamentals; asset shortages in EMs; issuing financial assets; market imperfection; Asset bubbles; Real interest rates; Asset prices; Capital markets; Emerging and frontier financial markets; Global (search for similar items in EconPapers)
Pages: 43
Date: 2012-04-01
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Journal Article: Consequences of asset shortages in emerging markets (2014) Downloads
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Handle: RePEc:imf:imfwpa:2012/102