Balance of Payments Anti-Crises
Several emerging economies have, until recently, experienced large government surpluses and accelerating foreign exchange reserve accumulation. This has been accompanied by economic booms, exchange rate appreciations and in some cases increases in domestic inflation. We show that one way to understand these episodes is as manifestations of balance of payments anti-crises, as reflecting the perception that the government intends to discontinue its accumulation of reserves in the near future. The end-phase of such crises is characterized by nominal interest rates approaching their zero lower bound in accelerating fashion and, if the government targets CPI inflation, by fast increasing domestic inflation.
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- Calvo, Guillermo A. & Vegh, Carlos A., 1999.
"Inflation stabilization and bop crises in developing countries,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 24, pages 1531-1614
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- Kumhof, Michael & Li, Shujing & Yan, Isabel, 2007.
"Balance of payments crises under inflation targeting,"
Journal of International Economics,
Elsevier, vol. 72(1), pages 242-264, May.
- Shujing Li & Isabel K. Yan & Michael Kumhof, 2007. "Balance of Payments Crises Under Inflation Targeting," IMF Working Papers 07/84, International Monetary Fund.
- Michael Kumhof & Shujing Li & Isabel Yan, . "Balance of Payments Crises Under Inflation Targeting," Working Papers 00020, Stanford University, Department of Economics.
- Enrique G. Mendoza, 2006.
"Real Exchange Rate Volatility and the Price of Nontradables in Sudden-Stop-Prone Economies,"
IMF Working Papers
06/88, International Monetary Fund.
- Enrique G. Mendoza, 2005. "Real Exchange Rate Volatility and the Price of Nontradables in Sudden-Stop-Prone Economies," NBER Working Papers 11691, National Bureau of Economic Research, Inc.
- Herman Kamil, 2008. "Is Central Bank Intervention Effective Under Inflation Targeting Regimes? The Case of Colombia," IMF Working Papers 08/88, International Monetary Fund.
- Calvo, Guillermo A, 1987. "Balance of Payments Crises in a Cash-in-Advance Economy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(1), pages 19-32, February.
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