Toward a Lender of First Resort /

If interest rates (country spreads) rise, debt can rapidly be subject to a snowball effect, which becomes self-fulfilling with regard to the fundamentals themselves. This is a market imperfection, because we cannot be confident that the unaided market will choose the "good" over the "...

Mô tả đầy đủ

Chi tiết về thư mục
Tác giả chính: Cohen, Daniel
Tác giả khác: Portes, Richard
Định dạng: Tạp chí
Ngôn ngữ:English
Được phát hành: Washington, D.C. : International Monetary Fund, 2006.
Loạt:IMF Working Papers; Working Paper ; No. 2006/066
Truy cập trực tuyến:Full text available on IMF
Miêu tả
Tóm tắt:If interest rates (country spreads) rise, debt can rapidly be subject to a snowball effect, which becomes self-fulfilling with regard to the fundamentals themselves. This is a market imperfection, because we cannot be confident that the unaided market will choose the "good" over the "bad" equilibrium. We propose a policy intervention to deal with this structural weakness in the mechanisms of international capital flows. This is based on a simple taxonomy that breaks down the origin of crises into three components: confidence (spreads and currency crisis), fundamentals (real growth rate), and economic policy (primary deficit). Theory then suggests a set of circumstances in which a lender of first resort would be desirable. The policy would seek to short-circuit confidence crises, partly by using IMF support to improve ex ante incentives. Theory also illuminates the potential role of collective action clauses in reducing the risk of self-fulfilling debt crises.
Mô tả sách:<strong>Off-Campus Access:</strong> No User ID or Password Required
<strong>On-Campus Access:</strong> No User ID or Password Required
Mô tả vật lý:1 online resource (26 pages)
Định dạng:Mode of access: Internet
số ISSN:1018-5941
Truy cập:Electronic access restricted to authorized BRAC University faculty, staff and students