Advanced Search
MyIDEAS: Login to save this article or follow this journal

Financial Integration, Capital Flight and the IMF

Contents:

Author Info

  • Srabani Guha

    (Deputy Advisor, Planning Commission, New Delhi 110001)

Registered author(s):

    Abstract

    This paper develops a portfolio-balance model, to show that a currency crisis following capital flight can occur in an open economy without any dramatic shift in the underlying fundamentals. The crisis is of liquidity brought about by sudden withdrawals of foreign capital from the financial market. Once a crisis hits, the traditional IMF policy of austerity may not work and may in fact worsen the crisis. It is also possible that an economy at the border of equilibrium may be thrown into disequilibrium, if any of the restrictive policies are pursued. The instability is rooted in the formation of market perception of risk associated with tradable short-term assets. Perceived risk makes asset demand functions nonlinear, which is instrumental in determining whether financial markets are stable, and if an economy eventually returns to equilibrium when subjected to a shock.

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

    Volume (Year): 40 (2005)
    Issue (Month): 1 (January)
    Pages: 37-64

    as in new window
    Handle: RePEc:dse:indecr:v:40:y:2005:i:1:p:37-64

    Contact details of provider:
    Postal: University of Delhi, Delhi 110 007
    Phone: 91-11-2766-6533/34/35, 2766-6703/04/05
    Fax: +91-11-7667159
    Email:
    Web page: http://www.ierdse.org/
    More information through EDIRC

    Order Information:
    Email:
    Web: http://www.ierdse.org/

    Related research

    Keywords: Currency Crises; Portfolio Balance Model; Financial Market Disequilibrium Pages: 37-64;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:dse:indecr:v:40:y:2005:i:1:p:37-64. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pami Dua).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.