Economics at your fingertips  

Vulnerability to purely contagious balance of payment crises in emerging economies: An application to the cases of Russia, Turkey, and Brazil

Cevdet Akçay and Ünal Zenginobuz ()

MPRA Paper from University Library of Munich, Germany

Abstract: We explore the possible role of interdependence of expectations in emerging market economies and analyze the crisis transmission mechanism within the ”pure”contagion framework. We consider the cases of Russia, Turkey, and Brazil, and assess whether the fundamentals of these countries allowed for the possibility of ”pure”contagion e¤ects from each other. In particular, we look at Russia - Turkey and Brazil - Russia pairs in year 1997 to see whether Brazilian and the Turkish economies exhibited vulnarability to pure contagion before the 1998 Russian crisis We also repeat the same exercise with the most recent 1999 data. The rationale for choosing these pairings is the huge volume of (luggage) trade between geographical neighbors Russia and Turkey, and the similar export structures of Russia and Brazil (predominantly raw materials) which are continents apart. Our results clearly indicate vulnerability of Brazilian and Turkish economies to high probability of crisis in Russia even in the face of improving fundamentals. In isolation, Brazilian and Turkish fundamentals were not weak enough to place them in a sure-crisis situation. With the incorporation of the Russian link, the multiple equilibria setting disappeared for both countries, rendering sure-crisis as the single equilibrium solution.

Keywords: contagion; balance of payment crisis; emerging economies; Turkey (search for similar items in EconPapers)
JEL-codes: F42 F41 (search for similar items in EconPapers)
Date: 2000-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Published in Russian and East European Finance and Trade 5.37(2001): pp. 5-21

Downloads: (external link) original version (application/pdf)

Related works:
Working Paper: Vulnerability to Purely Contagious Balance of Payment Crises in Emerging Economies: An Application to the Cases of Russia, Turkey, and Brazil (2001) Downloads
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:

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

Page updated 2020-11-09
Handle: RePEc:pra:mprapa:195