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Author:
Mr. Brad Setser https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Ioannis Halikias
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Mr. Alexander Pitt
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Mr. Christoph B. Rosenberg
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Mr. Brett E. House
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Mr. Jens Nystedt https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Christian Keller
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Abstract

This occasional paper describes the conceptual framework of the so-called balance sheet approach (BSA) and its application to emerging market countries. This type of analysis is increasingly used in the IMF’s analysis of debt-related vulnerabilities, as evidenced by a growing number of Article IV consultation reports providing applications to individual countries. There is also a large body of academic literature that examines financial crises and their origins by using the BSA (Box 1.1). Moreover, the approach has become a standard element in the toolkit of risk assessments conducted by the private sector.

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