Government Guarantees, Investment, and Vulnerability to Financial Crises.
The paper presents a new model of the East Asian crisis which combines three elements--moral hazard, investment collapse, and multiple equilibria--in a single account. The study locates the causes of the crisis in poor financial regulation, highly leveraged financial institutions, and implicit guara...
| Auteurs principaux: | , |
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| Format: | Journal article |
| Langue: | English |
| Publié: |
2003
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| _version_ | 1826265794685698048 |
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| author | Irwin, G Vines, D |
| author_facet | Irwin, G Vines, D |
| author_sort | Irwin, G |
| collection | OXFORD |
| description | The paper presents a new model of the East Asian crisis which combines three elements--moral hazard, investment collapse, and multiple equilibria--in a single account. The study locates the causes of the crisis in poor financial regulation, highly leveraged financial institutions, and implicit guarantees to the financial sector. The model has a unique long-run equilibrium with overinvestment. But in the short run, in which the capital stock is fixed, there may be multiple equilibria. In a crisis the government is forced to renege on its guarantees; the effect is a rapid reversal of foreign capital flows. |
| first_indexed | 2024-03-06T20:29:14Z |
| format | Journal article |
| id | oxford-uuid:307ca73d-43d1-450f-b5fb-85490cb81776 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T20:29:14Z |
| publishDate | 2003 |
| record_format | dspace |
| spelling | oxford-uuid:307ca73d-43d1-450f-b5fb-85490cb817762022-03-26T13:01:41ZGovernment Guarantees, Investment, and Vulnerability to Financial Crises.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:307ca73d-43d1-450f-b5fb-85490cb81776EnglishDepartment of Economics - ePrints2003Irwin, GVines, DThe paper presents a new model of the East Asian crisis which combines three elements--moral hazard, investment collapse, and multiple equilibria--in a single account. The study locates the causes of the crisis in poor financial regulation, highly leveraged financial institutions, and implicit guarantees to the financial sector. The model has a unique long-run equilibrium with overinvestment. But in the short run, in which the capital stock is fixed, there may be multiple equilibria. In a crisis the government is forced to renege on its guarantees; the effect is a rapid reversal of foreign capital flows. |
| spellingShingle | Irwin, G Vines, D Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title | Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title_full | Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title_fullStr | Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title_full_unstemmed | Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title_short | Government Guarantees, Investment, and Vulnerability to Financial Crises. |
| title_sort | government guarantees investment and vulnerability to financial crises |
| work_keys_str_mv | AT irwing governmentguaranteesinvestmentandvulnerabilitytofinancialcrises AT vinesd governmentguaranteesinvestmentandvulnerabilitytofinancialcrises |