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Emerging Market Crises: An Asset Markets Perspective

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  • Ricardo Caballero
  • Arvind Krishnamurthy

Abstract

The entire difference between a mild downturn and a devastating crisis is the occurrence of sharp fire sales of domestic assets and possibly foreign exchange and the ensuing collapse in the balance sheets of both the financial and nonfinancial sector. Why and how do such crises materialize? And why doesn’t the private sector take appropriate precautions to avoid the consequences of crises? In this paper we argue that the combination of weak international financial links and underdeveloped domestic financial markets offers a parsimonious account of these and related phenomena present in emerging markets.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ricardo Caballero & Arvind Krishnamurthy, 1998. "Emerging Market Crises: An Asset Markets Perspective," Working papers 98-18, Massachusetts Institute of Technology (MIT), Department of Economics.
    • Handle: RePEc:mit:worpap:98-18
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    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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