International Monetary Fund Resources and Contagion Mechanisms: A Hypothesis
This paper examines analytically the possibility that, due to the limitedness of its resources, the International Monetary Fund (IMF) could spread financial crises rather than preventing them, thus developing into a contagion channel. The model we build, based on the most recent global-games literature, allows us to show that this risk is sensible from a theoretical point of view. We conclude that the IMF, when planning its interventions, should take into account this kind of contagion it contributes in creating. Some policy implications are derived.
Volume (Year): 95 (2005)
Issue (Month): 6 (November-December)
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- Jean-Charles Rochet & Xavier Vives, 2004.
"Coordination Failures and the Lender of Last Resort: Was Bagehot Right After All?,"
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- Jean-Charles Rochet & Xavier Vives, 2002. "Coordination failures and the lender of last resort: was Bagehot right after all?," LSE Research Online Documents on Economics 24928, London School of Economics and Political Science, LSE Library.
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