Professional Documents
Culture Documents
(appendix)
(appendix)
E.g.,
Sachs, Tornell, & Velasco (1996) Financial crises in emerging markets: the lessons from 1995, BPEA.
Frankel & Rose (1996) "Currency Crashes in Emerging Markets," JIE.
Kaminsky, Lizondo, & Reinhart (1998) Leading Indicators of Currency Crises," IMF Staff Papers.
Kaminsky & Reinhart (1999) "The twin crises," AER.
10%
20%
30%
40%
50%
60%
Reserves
Real Exchange Rate
GDP
Credit
Current Account
Money Supply
Budget Balance
Exports or Imports
Inflation
Equity Returns
Real Interest Rate
Debt Profile
Terms of Trade
Political/Legal
Contagion
Capital Account
External Debt
70%
EM
EM countries
countries used
used post-2003
post-2003 inflows
inflows
toto
build
foreign
exchange
reserves
build
international
reserves
(recycling
petro-dollars)
3rd boom
(carry trade & BRICs)
stop
(international
debt crisis)
2nd boom
stop
(emerging markets)
(Asia
crisis)
start
IMF
start
Appendix 4
Estonia
Macao, China
Russian Federation
Bo tto m 10
Georgia
Mexico
Finland
Turkey
Australia
Poland
Argentina
Sri Lanka
Jordan
Indonesia
To p 10
64 countries in sample
India
China
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
12
Federal Reserve Security Purchases on Emerging Markets., UCB & World Bank, Jan.
Hill (2014), Exploring Early Warning Indicators for Financial Crises in 2013 & 2014, HKS, April.
Mishra, Moriyama, NDiaye & Nguyen (2014), Impact of Fed Tapering
Announcements on Emerging Markets, IMF, June.
Aizenman, Cheung, & Ito (2014), International Reserves Before and After the Global
Crisis: Is There No End to Hoarding? NBER WP 20386, Aug.
Source: FT
March 2014
www.nber.org/papers/w19980.pdf
real appreciation
B. Eichengreen & P. Gupta (2013) Tapering Talk: The Impact of Expectations of Reduced Federal
http://eml.berkeley.edu/~eichengr/tapering_talk_12-16-13.pdf
(%, vs. $)
in 2013
Conclusion
Many EMs learned lessons from the 1980s & 1990s,
and by 2008 were in a stronger position to withstand shocks:
Weaker budgets
Inflation
Current account deficits
The return of fx-denominated private debt.
balance-sheet effect.
1998 version:
Apparently there existed no such combination, if reserves
had been allowed to run low and $ debt to run high.
Textbook version:
there exists a
combination of
devaluation and
interest rate rise
that will satisfy
external finance
constraint without
causing recession.
Lesson-of-1998
version:
There may exist
no combination
that avoids
recession, if
reserves have
already been
allowed to run
low and dollar
debt to run high.
Superhighways:
Modern financial markets get you where you want to go fast,
but accidents are bigger, and so more care is required.
R.Merton
But to claim that moral hazard means we should abolish the IMF
would be like claiming that drivers would be safer with a spike in
the center of the steering wheel column. M.Mussa
Correlation does not imply causation: That the IMF (doctors) are
often found at the scene of fatal accidents (crises) does not mean
that they cause them.