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Book/Printed Material Bubbles and capital flow volatility causes and risk management

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Title

  • Bubbles and capital flow volatility causes and risk management

Summary

  • "Emerging market economies are fertile ground for the development of real estate and other financial bubbles. Despite these economies' significant growth potential, their corporate and government sectors do not generate the financial instruments to provide residents with adequate stores of value. Capital often flows out of these economies seeking these stores of value in the developed world. Bubbles are beneficial because they provide domestic stores of value and thereby reduce capital outflows while increasing investment. But they come at a cost, as they expose the country to bubble-crashes and capital flow reversals. We show that domestic financial underdevelopment not only facilitates the emergence of bubbles, but also leads agents to undervalue the aggregate risk embodied in financial bubbles. In this context, even rational bubbles can be welfare reducing. We study a set of aggregate risk management policies to alleviate the bubble-risk. We show that liquidity requirements, sterilization of capital inflows and structural policies aimed at developing public debt markets "collateralized" by future revenues, all have a high payoff in this environment"--National Bureau of Economic Research web site.

Names

  • Caballero, Ricardo J.
  • Krishnamurthy, Arvind
  • National Bureau of Economic Research

Created / Published

  • Cambridge, MA : National Bureau of Economic Research, c2005.

Headings

  • -  Capital market--Developing countries
  • -  Capital movements--Developing countries
  • -  Financial crises--Developing countries
  • -  Risk management--Developing countries

Notes

  • -  Title from PDF file as viewed on 9/28/2005.
  • -  Includes bibliographical references.
  • -  Also available in print.
  • -  Mode of access: World Wide Web.
  • -  System requirements: Adobe Acrobat Reader.

Call Number/Physical Location

  • HB1

Digital Id

Library of Congress Control Number

  • 2005620320

Access Advisory

  • Unrestricted online access

Online Format

  • image
  • pdf

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Cite This Item

Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

Caballero, Ricardo J, Arvind Krishnamurthy, and National Bureau Of Economic Research. Bubbles and Capital Flow Volatility Causes and Risk Management. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. https://aj.sunback.homes/item/2005620320/.

APA citation style:

Caballero, R. J., Krishnamurthy, A. & National Bureau Of Economic Research. (2005) Bubbles and Capital Flow Volatility Causes and Risk Management. Cambridge, MA: National Bureau of Economic Research. [Pdf] Retrieved from the Library of Congress, https://aj.sunback.homes/item/2005620320/.

MLA citation style:

Caballero, Ricardo J, Arvind Krishnamurthy, and National Bureau Of Economic Research. Bubbles and Capital Flow Volatility Causes and Risk Management. Cambridge, MA: National Bureau of Economic Research, 2005. Pdf. Retrieved from the Library of Congress, <aj.sunback.homes/item/2005620320/>.