TY  - JOUR
AU  - Chang, Roberto
AU  - Velasco, Andres
TI  - Liquidity Crises in Emerging Markets:  Theory and Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7272
PY  - 1999
Y2  - July 1999
DO  - 10.3386/w7272
UR  - http://www.nber.org/papers/w7272
L1  - http://www.nber.org/papers/w7272.pdf
N1  - Author contact info:
Roberto Chang
Rutgers University
Department of Economics
75 Hamilton Street
New Brunswick, NJ  08901
Tel: 732/932-7269
Fax: 732/932-7416
E-Mail: chang@econ.rutgers.edu

Andrés Velasco
School of Public Policy 
London School of Economics and 
Political Science 
Houghton Street 
London WC2A 2AE 
United Kingdom
Tel: +4420 7955 7982
E-Mail: A.Velasco1@lse.ac.uk
M1  - published as Roberto Chang, Andrés Velasco. "Liquidity Crises in Emerging Markets: Theory and Policy," in Ben S. Bernanke and Julio J. Rotemberg, editors, "NBER Macroeconomics Annual 1999, Volume 14" MIT (2000)

AB  - We build a model of financial sector illiquidity in an open economy.  Illiquidity  defined as a situation in which a country's consolidated financial system has potential short-term obligations in foreign currency that exceed the amount of foreign currency it can have access to on short notice  can be associated with self fulfilling bank and/or currency crises. We focus on the policy implications of the model, and study the role of capital inflows and the maturity of external debt, the way in which real exchange rate depreciation can transmit and magnify the effects of bank illiquidity, options for financial regulation, the role of debt and deficits, and the implications of adopting different exchange rate regimes.
ER  -