IMF Working Papers

Multiple Equilibria, Contagion, and the Emerging Market Crises

By Paul R Masson

December 1, 1999

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Paul R Masson. Multiple Equilibria, Contagion, and the Emerging Market Crises, (USA: International Monetary Fund, 1999) accessed September 19, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper surveys the types of models producing multiple equilibria in financial markets. It argues that such models are consistent with observed phenomena, such as the greater volatility of financial asset prices than of macroeconomic fundamentals. Alternative explanations are compared with the stylized facts concerning capital flows, portfolio shifts, and exchange rate crises. Implications for crisis prediction and prevention are then discussed.

Subject: Asset and liability management, Asset prices, Balance of payments, Banking, Capital flows, Emerging and frontier financial markets, Financial crises, Financial markets, Liquidity, Prices

Keywords: Africa, Asia and Pacific, Asset, Asset price movement, Asset prices, Bank run, Capital flows, Central and Eastern Europe, Contagion, Crisis, Crisis zone, Currency crisis, Emerging and frontier financial markets, Emerging market, Emerging market crisis, Emerging-market country, Equilibrium asset price, Financial asset, Global, Liquidity, Market, Multiple equilibria, Price, WP

Publication Details

  • Pages:

    25

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1999/164

  • Stock No:

    WPIEA1641999

  • ISBN:

    9781451857979

  • ISSN:

    1018-5941