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Balance of Payments Crisis: The Role of Short-Term Debt

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  • Michael Kumhof

Abstract

June 2000 (Revised) This paper presents a dynamic general equilibrium model of balance of payments crises to analyze the role of sterilization policies during speculative attacks. It is shown that if domestic bond interest rates are not allowed to rise real money balances increase and the attack takes place entirely in the domestic bond market, leading to a sharp increase in central bank domestic credit. Data for the 1994 Mexican crisis are consistent with this theory. Keywords: intellectual property rights, copyright, sui generis protection of expressive material, economics of information-goods, open science, "fair use," scientific databases. JEL Classification: H4, K39, O31, O34 -->

Suggested Citation

  • Michael Kumhof, "undated". "Balance of Payments Crisis: The Role of Short-Term Debt," Working Papers 00019, Stanford University, Department of Economics.
  • Handle: RePEc:wop:stanec:00019
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    File URL: http://www-econ.stanford.edu/faculty/workp/swp00019.pdf
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    Cited by:

    1. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "Paper tigers?: A model of the Asian crisis," European Economic Review, Elsevier, vol. 43(7), pages 1211-1236, June.
    2. Menzie D. Chinn & Kenneth M. Kletzer, 1999. "International capital inflows, domestic financial intermediation and financial crises under imperfect information," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
    3. Kumhof, Michael, 2000. "A quantitative exploration of the role of short-term domestic debt in balance of payments crises," Journal of International Economics, Elsevier, vol. 51(1), pages 195-215, June.
    4. Bhattacharya, Utpal, 2005. "Financial liberalization and the stability of currency pegs," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 351-374, March.
    5. Amartya Lahiri & Carlos A. Vegh, 2000. "Delaying the Inevitable: Optimal Interest Rate Policy and BOP Crises," NBER Working Papers 7734, National Bureau of Economic Research, Inc.
    6. Robert Dekle & Kenneth Kletzer, 2002. "Domestic Bank Regulation and Financial Crises: Theory and Empirical Evidence from East Asia," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 507-558 National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    intellectual property rights; copyright; sui generis protection of expressive material; economics of information-goods; open science;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • K39 - Law and Economics - - Other Substantive Areas of Law - - - Other
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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