Narrow Your Choices

Refine By Countries

Refine By Topic

Refine By Series

Refine By Language

  • English (1)

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Browse

You are looking at 1 - 1 of 1 items for :

  • Type: Journal Issue x
  • Financial Crises x
  • Economic growth x
  • Financial crises x
  • Balance of payments x
  • Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors x
  • Formal and Informal Sectors; Shadow Economy; Institutional Arrangements x
  • Refine By Language: English x
Clear All Modify Search
Cover IMF Working Papers
Sudden Stops, Output Drops, and Credit Collapses
Jihad Dagher
This paper proposes a tractable Sudden Stop model to explain the main patterns in firm level data in a sample of Southeast Asian firms during the Asian crisis. The model, which features trend shocks and financial frictions, is able to generate the main patterns observed in the sample during and following the Asian crisis, including the ensuing credit-less recovery, which are also patterns broadly shared by most Sudden Stop episodes as documented in Calvo et al. (2006). The model also proposes a novel explanation as to why small firms experience steeper declines than their larger peers as documented in this paper. This size effect is generated under the assumption that small firms are growth firms, to which there is support in the data. Trend shocks when combined with financial frictions in this model also generate strong leverage effects in line with what is observed in the sample, and with other observations from the literature.
Keywords:
WP; mover accent; market value; business cycle; interest rate; transition probability; Financial liberalization; welfare gain; financial deepening; economic growth; small firm; maximization problem; productivity parameter; firm decrease; growth firm; leverage firm; Sudden stops; Financial frictions; Stocks; Business cycles; Southeast Asia