Arbeitspapier
The role of expectations in sudden stops
This paper presents a flexible-price small open economy model with a peso problem in productivity states. Agents rationally adjust their beliefs about future productivity growth after the arrival of news. A downward revision of expectations triggers a Sudden Stop, together with large declines in GDP, employment, consumption and investment. There need not be any actual change in productivity growth to generate large fluctuations. Quantitatively, the model goes a long way in matching the 1998 Korean Crisis and subsequent swift recovery.
- Language
-
Englisch
- Bibliographic citation
-
Series: CAE Working Paper ; No. 07-10
- Classification
-
Wirtschaft
- Subject
-
sudden stops
small open economy
expectations
peso problem
Produktivität
Kapitalimport
Kleines-offenes-Land
Erwartungstheorie
Theorie
Südkorea
- Event
-
Geistige Schöpfung
- (who)
-
Mertens, Karel
- Event
-
Veröffentlichung
- (who)
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Cornell University, Center for Analytical Economics (CAE)
- (where)
-
Ithaca, NY
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Mertens, Karel
- Cornell University, Center for Analytical Economics (CAE)
Time of origin
- 2007
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