1.

Record Nr.

UNINA9910967123203321

Autore

Mendoza Enrique

Titolo

Are Asset Price Guarantees Useful for Preventing Sudden Stops?A Quantitative Investigation of the Globalization Hazard-Moral Hazard Tradeoff / / Enrique Mendoza, Ceyhun Bora Durdu

Pubbl/distr/stampa

Washington, D.C. : , : International Monetary Fund, , 2006

ISBN

9786613830630

9781462337705

1462337708

9781452708782

1452708789

9781283518185

128351818X

9781451908695

1451908695

Edizione

[1st ed.]

Descrizione fisica

1 online resource (42 p.)

Collana

IMF Working Papers

Altri autori (Persone)

DurduCeyhun Bora

Soggetti

Economic policy

Globalization

Asset prices

Capital movements

Consumption

Deflation

Economics

Exports and Imports

Finance

Finance: General

Financial Instruments

Financial risk management

General Financial Markets: Government Policy and Regulation

Inflation

Institutional Investors

International economics

International Investment

Investment & securities

Investments: Stocks

Long-term Capital Movements

Macroeconomics



Macroeconomics: Consumption

Moral hazard

Non-bank Financial Institutions

Pension Funds

Price Level

Prices

Saving

Stocks

Sudden stops

Wealth

Mexico

Lingua di pubblicazione

Inglese

Formato

Materiale a stampa

Livello bibliografico

Monografia

Note generali

"March 2006."

Nota di bibliografia

Includes bibliographical references.

Nota di contenuto

""Contents""; ""I. INTRODUCTION""; ""II. A MODEL OF GLOBALIZATION HAZARD AND PRICE GUARANTEES""; ""III. CHARACTERIZING THE GLOBALIZATION HAZARD-MORAL HAZARD TRADEOFF""; ""IV. QUANTITATIVE ANALYSIS""; ""V. NORMATIVE IMPLICATIONS AND SENSITIVITY ANALYSIS""; ""VI. CONCLUSIONS""; ""REFERENCES""

Sommario/riassunto

An implication of the "globalization hazard" hypothesis is that sudden stops could be prevented by offering foreign investors price guarantees on emerging markets assets. These guarantees create a tradeoff, however, because they weaken globalization hazard by creating international moral hazard. We study this tradeoff using an equilibrium asset-pricing model. Without guarantees, margin calls and trading costs cause Sudden Stops driven by Fisher's debt-deflation process. Price guarantees prevent this deflation by propping up foreign asset demand, but their effectiveness and welfare implications depend critically on the price elasticity of foreign demand and on making the guarantees contingent on debt levels.