International Contagion : Implications for Policy
The authors try to identify and evaluate the public policy implications of financial crises. In this model, financial contagion can be driven by a combination of fundamentals and by self-fulfilling market expectations. The model allows the authors...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/03/437907/international-contagion-implications-policy http://hdl.handle.net/10986/19845 |
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okr-10986-198452021-04-23T14:03:47Z International Contagion : Implications for Policy Chang, Roberto Majnoni, Giovanni ACCOUNTING ADB ALTERNATIVE INVESTMENTS ANALYTICAL APPROACH BALANCE SHEETS BANK RESTRUCTURING BANK RUNS BANK SAFETY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BONDS BORROWING CAPITAL ACCUMULATION CAPITAL CONTROLS CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK CERTAIN EXTENT CONSOLIDATION CONTAGION CONTINGENT LIABILITIES CORPORATE SECTOR CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEBT FINANCING DEBT STRUCTURE DEPOSIT INSURANCE DISTORTIONARY TAXES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE FLEXIBILITY EXCHANGE RATES EXPECTED RETURN EXPECTED VALUE FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DECISIONS FINANCIAL DEEPENING FINANCIAL DISTRESS FINANCIAL FRAGILITY FINANCIAL INTEGRATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN EXCHANGE GDP GROWTH POTENTIAL INCOME INDEXATION INFLATION INSOLVENCY INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL CRISIS LENDER OF LAST RESORT LIABILITY MANAGEMENT LIQUIDITY MACROECONOMIC POLICIES MATURITIES MONETARY POLICY MONEY SUPPLY OFF BALANCE SHEET OPPORTUNITY COST PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC POLICY RECESSION REGULATORY FRAMEWORK RISK NEUTRAL RISK PREMIUM RISK SHARING RUNS ON BANKS SHAREHOLDERS SHORT TERM DEBT STOCK MARKETS TAXATION The authors try to identify and evaluate the public policy implications of financial crises. In this model, financial contagion can be driven by a combination of fundamentals and by self-fulfilling market expectations. The model allows the authors to identify different notions of contagion, especially the distinction between "monsoonal effects", "spillovers", and "switchers between equilibria". They discuss both domestic and international policy options. Domestic policies, they say, should be aimed at reducing financial fragility - that is, reducing unnecessary short-term debt commitments. With explicit commitments, the maturity of external debts should be lengthened. With implicit commitments, such as private liability guarantees, they emphasize limiting or eliminating such guarantees, to improve an economy's international liquidity and reduce its exposure to contagion. Internationally, they stress the need for improving financial standards, which makes it easier to assess when a country is subject to different kinds of contagion. The effectiveness of international rescue packages depends on the kind of contagion to which a country is exposed. Implications: the international community should help those countries that are already helping themselves. 2014-08-28T19:07:13Z 2014-08-28T19:07:13Z 2000-03 http://documents.worldbank.org/curated/en/2000/03/437907/international-contagion-implications-policy http://hdl.handle.net/10986/19845 English en_US Policy Research Working Paper;No. 2306 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ADB ALTERNATIVE INVESTMENTS ANALYTICAL APPROACH BALANCE SHEETS BANK RESTRUCTURING BANK RUNS BANK SAFETY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BONDS BORROWING CAPITAL ACCUMULATION CAPITAL CONTROLS CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK CERTAIN EXTENT CONSOLIDATION CONTAGION CONTINGENT LIABILITIES CORPORATE SECTOR CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEBT FINANCING DEBT STRUCTURE DEPOSIT INSURANCE DISTORTIONARY TAXES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE FLEXIBILITY EXCHANGE RATES EXPECTED RETURN EXPECTED VALUE FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DECISIONS FINANCIAL DEEPENING FINANCIAL DISTRESS FINANCIAL FRAGILITY FINANCIAL INTEGRATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN EXCHANGE GDP GROWTH POTENTIAL INCOME INDEXATION INFLATION INSOLVENCY INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL CRISIS LENDER OF LAST RESORT LIABILITY MANAGEMENT LIQUIDITY MACROECONOMIC POLICIES MATURITIES MONETARY POLICY MONEY SUPPLY OFF BALANCE SHEET OPPORTUNITY COST PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC POLICY RECESSION REGULATORY FRAMEWORK RISK NEUTRAL RISK PREMIUM RISK SHARING RUNS ON BANKS SHAREHOLDERS SHORT TERM DEBT STOCK MARKETS TAXATION |
| spellingShingle |
ACCOUNTING ADB ALTERNATIVE INVESTMENTS ANALYTICAL APPROACH BALANCE SHEETS BANK RESTRUCTURING BANK RUNS BANK SAFETY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BONDS BORROWING CAPITAL ACCUMULATION CAPITAL CONTROLS CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK CERTAIN EXTENT CONSOLIDATION CONTAGION CONTINGENT LIABILITIES CORPORATE SECTOR CURRENCY CRISES CURRENCY DEPRECIATION DEBT DEBT FINANCING DEBT STRUCTURE DEPOSIT INSURANCE DISTORTIONARY TAXES EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE FLEXIBILITY EXCHANGE RATES EXPECTED RETURN EXPECTED VALUE FEDERAL RESERVE BANK OF ATLANTA FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DECISIONS FINANCIAL DEEPENING FINANCIAL DISTRESS FINANCIAL FRAGILITY FINANCIAL INTEGRATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE FINANCIAL SYSTEMS FOREIGN EXCHANGE GDP GROWTH POTENTIAL INCOME INDEXATION INFLATION INSOLVENCY INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL CRISIS LENDER OF LAST RESORT LIABILITY MANAGEMENT LIQUIDITY MACROECONOMIC POLICIES MATURITIES MONETARY POLICY MONEY SUPPLY OFF BALANCE SHEET OPPORTUNITY COST PROBABILITY OF DEFAULT PUBLIC DEBT PUBLIC POLICY RECESSION REGULATORY FRAMEWORK RISK NEUTRAL RISK PREMIUM RISK SHARING RUNS ON BANKS SHAREHOLDERS SHORT TERM DEBT STOCK MARKETS TAXATION Chang, Roberto Majnoni, Giovanni International Contagion : Implications for Policy |
| relation |
Policy Research Working Paper;No. 2306 |
| description |
The authors try to identify and evaluate
the public policy implications of financial crises. In this
model, financial contagion can be driven by a combination of
fundamentals and by self-fulfilling market expectations. The
model allows the authors to identify different notions of
contagion, especially the distinction between
"monsoonal effects", "spillovers", and
"switchers between equilibria". They discuss both
domestic and international policy options. Domestic
policies, they say, should be aimed at reducing financial
fragility - that is, reducing unnecessary short-term debt
commitments. With explicit commitments, the maturity of
external debts should be lengthened. With implicit
commitments, such as private liability guarantees, they
emphasize limiting or eliminating such guarantees, to
improve an economy's international liquidity and reduce
its exposure to contagion. Internationally, they stress the
need for improving financial standards, which makes it
easier to assess when a country is subject to different
kinds of contagion. The effectiveness of international
rescue packages depends on the kind of contagion to which a
country is exposed. Implications: the international
community should help those countries that are already
helping themselves. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Chang, Roberto Majnoni, Giovanni |
| author_facet |
Chang, Roberto Majnoni, Giovanni |
| author_sort |
Chang, Roberto |
| title |
International Contagion : Implications for Policy |
| title_short |
International Contagion : Implications for Policy |
| title_full |
International Contagion : Implications for Policy |
| title_fullStr |
International Contagion : Implications for Policy |
| title_full_unstemmed |
International Contagion : Implications for Policy |
| title_sort |
international contagion : implications for policy |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/03/437907/international-contagion-implications-policy http://hdl.handle.net/10986/19845 |
| _version_ |
1764441661443670016 |