|
Joshua Aizenman, Nancy P. Marion
NBER Working Paper No. 7389*
Issued in October 1999
NBER Program(s): IFM
---- Abstract -----
We show that increased uncertainty about the size of an emerging market's external debt has a nonlinear and potentially large adverse effect on the supply of international credit offered to them. We also show that if international creditors are first- order risk averse, attaching greater weight to utility derived from bad outcomes than from good ones, a moderate increase in uncertainty about debt overhang or about other relevant factors affecting repayment prospects-- can cause the supply of credit to dry up completely. We therefore offer one possible explanation for why emerging markets may find themselves suddenly cut off from international capital markets.
*Published: Aizenman, Joshua A. and Nancy Marion. "Reserve Uncertainty And The Supply Of International Credit," Journal of Money, Credit and Banking, 2002, v34(3,Aug), Part 1, 631-649.
Financial Crises in Emerging Markets, Pacific Basin FED Conference Volume, Cambridge: Cambridge University Press, forthcoming.
Would you like an annual subscription to NBER Working Papers? Click
here for more information.
You may purchase this paper on-line in .pdf format
from SSRN.com ($5) for electronic delivery.
Information for subscribers and others expecting no-cost downloads
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
| 
