EconPapers    
Economics at your fingertips  
 

Globalization and Emerging Markets: With or Without Crash?

Philippe Martin () and Helene Rey ()

Sciences Po publications from Sciences Po

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.

JEL-codes: F12 F32 F37 F41 O16 (search for similar items in EconPapers)
Date: 2006-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (62) Track citations by RSS feed

Published in American Economic Review, 2006, vol. 96, pp.1631-1651

Downloads: (external link)
https://spire.sciencespo.fr/hdl:/2441/9261/resources/martin-aer-2006.pdf (application/pdf)

Related works:
Journal Article: Globalization and Emerging Markets: With or Without Crash? (2006) Downloads
Working Paper: Globalization and Emerging Markets: With or without Crash? (2006)
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2006) Downloads
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) Downloads
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) Downloads
Working Paper: Globalization and Emerging Markets: With or Without Crash? (2005) 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: https://EconPapers.repec.org/RePEc:spo:wpmain:info:hdl:2441/9261

Access Statistics for this paper

More papers in Sciences Po publications from Sciences Po Contact information at EDIRC.
Bibliographic data for series maintained by Spire @ Sciences Po Library ().

 
Page updated 2019-11-14
Handle: RePEc:spo:wpmain:info:hdl:2441/9261