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Equity market and foreign capital

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  • Yoko Furukawa

Abstract

I present a model that demonstrates that the market mechanism is not always effective in stabilizing an open equity market. Foreign capital inflows create multiple equilibria in the equity market, which may simultaneously trigger a currency crisis as well as an equity market crash even if the equity market is well developed.

Suggested Citation

  • Yoko Furukawa, 2009. "Equity market and foreign capital," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 349-358, February.
    • Handle: RePEc:cje:issued:v:42:y:2009:i:1:p:349-358
    DOI: 10.1111/j.1540-5982.2008.01511.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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