Empirical Models of Short-Term Debt and Crises: Do They Test the Creditor Run Hypothesis?

18 Pages Posted: 7 Jun 2002

See all articles by Enrica Detragiache

Enrica Detragiache

International Monetary Fund (IMF) - European Department

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Date Written: May 2002

Abstract

A positive correlation between short-term debt and crises has been interpreted as evidence in favor of self-fulfilling creditor runs, which have been blamed for financial crises in developing countries. We show that this correlation can also be explained by a standard model of optimal borrowing without creditor runs. In such a model, imposing capital controls on short-term external debt is not Pareto-improving.

Keywords: Debt crises, default, creditor runs

JEL Classification: F34, F32

Suggested Citation

Detragiache, Enrica and Spilimbergo, Antonio, Empirical Models of Short-Term Debt and Crises: Do They Test the Creditor Run Hypothesis? (May 2002). Available at SSRN: https://ssrn.com/abstract=314922 or http://dx.doi.org/10.2139/ssrn.314922

Enrica Detragiache (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6346 (Phone)
202-623-6336 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute ( email )

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

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