The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification...

(Disponible en idioma inglés únicamente) Las fricciones financieras son un elemento central de la mayoría de los modelos que ha propuesto la obra publicada sobre los mercados emergentes para explicar el fenómeno de las paradas repentinas. A la fecha, son pocos los estudios que han procurado...

Infrequent but dramatic episodes of outright default on domestic sovereign debt are an important historical fact that remains unexplained. We propose an incomplete-markets, heterogeneous-agents model in which domestic default can be optimal for a utilitarian government that responds to...

Enrique Mendoza is the Presidential Professor of Economics at the University of Pennsylvania. His work concentrates on financial crises and fiscal policy, in particular in an international context.

What are the stylized facts that characterize the dynamics of credit booms and the associated fluctuations in macro-economic aggregates? This paper answers this question by applying a method proposed in our earlier work for measuring and identifying credit booms to data for 61 emerging and...

During the period 1990-93, Finland experienced the deepest economic downturn in an industrialized country since the 1930s. We argue that the collapse of the Finnish trade with the Soviet Union in and of itself resulted in a large contraction of the economy and a costly restructuring of the...

Enrique Mendoza is Professor of International Economics & Finance at the University of Maryland and Resident Scholar at the International Monetary Fund. He has written extensively on international finance, in particular in emerging economies.

Financial frictions are a central element of most of the models that the literature on emerging markets crises has proposed for explaining the Sudden Stop phenomenon. To date, few studies have aimed to examine the quantitative implications of these models and to integrate them with an...

(Disponible en idioma inglés únicamente) El contagio financiero y las paradas repentinas de los ingresos de capitales que se experimentan durante las crisis de los mercados emergentes pueden originarse en una combinación explosiva de falta de credibilidad de políticas e imperfecciones del...

Financial contagion and Sudden Stops of capital inflows experienced in emerging-markets crises may originate in an explosive mix of lack of policy credibility and world capital market imperfections that afflict emerging economies with national currencies. Hence, this paper argues that abandoning...