Multiple Equilibria, Contagion, and the Emerging Market Crises

25 Pages Posted: 10 Feb 2006

See all articles by Paul R. Masson

Paul R. Masson

International Monetary Fund (IMF) - Research Department; The Brookings Institution

Date Written: November 1999

Abstract

The paper surveys the types of models producing multiple equilibria in financial markets. It argues that such models are consistent with observed phenomena, such as the greater volatility of financial asset prices than of macroeconomic fundamentals. Alternative explanations are compared with the stylized facts concerning capital flows, portfolio shifts, and exchange rate crises. Implications for crisis prediction and prevention are then discussed.

Keywords: contagion, multiple equilibria, currency crisis

JEL Classification: F3, F4

Suggested Citation

Masson, Paul R., Multiple Equilibria, Contagion, and the Emerging Market Crises (November 1999). Available at SSRN: https://ssrn.com/abstract=880819 or http://dx.doi.org/10.2139/ssrn.880819

Paul R. Masson (Contact Author)

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