Speculative Behaviour, Debt Default and Contagion: An Explanation of the Latin American Crisis 2001-2002
This paper provides a model incorporating strategic speculative behaviour into a framework of debt default and contagion. A basic model of contagion shows how economies which appear fundamentally sound, can fail to meet foreign obligations when there are inter-linkages with a defaulting country. Introducing speculators into the framework increases the incidence of debt default and contagion. However, when these speculators view the economy with a degree of uncertainty, the likelihood of default and contagion is even greater. SpeculatorsÂ’ perceptions over the state of the economy are therefore paramount when estimating the impact of a crisis on a region.
|Date of creation:||Mar 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Adelaide SA 5005|
Phone: (+ 61 8) 8303 5672
Fax: (+ 61 8) 8223 1460
Web page: http://www.adelaide.edu.au/cies/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:adl:cieswp:2003-08. 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: (Dmitriy Kvasov)
If references are entirely missing, you can add them using this form.