Series: IMF Working Papers
Author(s): Arvind Krishnamurthy , and Ricardo Caballero
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 September 1999
Keywords: Capital flows, fire sales, financial constraints, contractual and corporate governance problems, balance sheets, wasted collateral, domestic and foreign spreads, excessive leverage, collateral underprovision, real depreciation
The entire difference between a mild downturn and a devastating crisis is the occurrence of sharp fire sales of domestic assets and possibly foreign exchange and the ensuing collapse in the balance sheets of both t...