External Finance, Sudden Stops, and Financial Crisis; What is Different This Time?
This paper develops a two-country DSGE model to investigate the transmission of a global financial crisis to a small open economy. We find that economies hit by a sudden stop arising from financial distress in the global economy are likely to face a more prolonged crisis than sudden stop episodes of domestic origin. Moreover, in contrast to the existing literature, our results suggest that the greater a country's trade integration with the rest of the world, the greater the response of its macroeconomic aggregates to a sudden stop of capital flows.
Saved in:
freely available
Saved in favorites
Similar items by subject
-
Global Financial Crisis, Financial Contagion, and Emerging Markets
Ozkan, F. Gulcin, (2012)
-
Central America; Global Integration and Regional Cooperation
Rodlauer, Markus, (2005)
-
External Performance in Low-Income Countries
Prati, Alessandro, (2011)
- More ...
Similar items by person