International financial crises

Research output: Chapter in Book/Report/Conference proceedingChapter

12 Scopus citations

Abstract

This chapter surveys recent research on international financial crises. A financial crisis is characterized by a sudden, dramatic outflow of financial resources from an economy with an open capital account. This outflow may be primarily driven by the expectation of a large nominal devaluation, in a situation in which the domestic monetary-fiscal regime appears inconsistent with a fixed exchange rate. Or the outflow may be driven by a reallocation of funds by foreign and domestic investors, due to a changed perception in the country's growth prospects, to an increase in the risk of domestic default, or to a shift in investors' attitudes toward risk. Often times, monetary and financial elements are combined. A drop in domestic asset prices and in the real exchange rate can act as powerful amplifiers of the real effects of the crisis, through adverse balance-sheet adjustments. The chapter surveys research that looks both at the monetary and at the financial side of crises, also discussing work that investigates the accumulation of imbalances preceding the crisis and the scope for preventive policies.

Original languageEnglish (US)
Title of host publicationHandbook of International Economics
PublisherElsevier B.V.
Pages689-740
Number of pages52
DOIs
StatePublished - 2014

Publication series

NameHandbook of International Economics
Volume4
ISSN (Print)1573-4404

Keywords

  • Currency crisis
  • Current account reversal
  • Sovereign debt crisis
  • Sudden stop

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Political Science and International Relations

Fingerprint

Dive into the research topics of 'International financial crises'. Together they form a unique fingerprint.

Cite this