External Finance, Sudden Stops, and Financial Crisis : What is Different This Time?

Author/Editor:

F. Gulcin Ozkan ; Filiz D Unsal

Publication Date:

July 1, 2010

Electronic Access:

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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:

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.

Series:

Working Paper No. 10/158

Subject:

English

Publication Date:

July 1, 2010

ISBN/ISSN:

9781455201419/1018-5941

Stock No:

WPIEA2010158

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

34

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