Lessons from Systemic Financial Crises Guillermo Calvo Columbia University India Policy Forum 2009. Sponsored by NCAER and The Brookings Institution. New Delhi, July 14-15, 2009 Sudden Stop, SS
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cushioned the blow by injecting
liquidity through adecline in
(% of GDP, last 4 quarters, last value 2008-IV)
Note: “Other” Flows include Loans, Banking Capital, Rupee Debt Service and other unclassified flows.
Source: Reserve Bank of India.
(quarterly data, % of GDP)
Source: EIU and IFS.
(Current Account Balance as % of GDP, Terms of Trade 2005=100)
Terms of Trade
At 2005 prices
Note: e = estimate
(EMBI sovereign spread & CurrentAccount Balance in EMs, millions of USD, lastfourquarters)
Note: Includes Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Slovak Republic, South Africa, Thailand, Turkey and Venezuela.
(LAC-7, s.a. Investment, 1998.II=100)
(LAC-7, s.a. GDP, 1998.II=100)
much better from BOP view point
Greenspan’s “conundrum” testimony
Lehman Brothers files for bankruptcy
Fears of FED tightening
Pre-Asian Crisis Yield
Pre-Asian Crisis Spread
Beginning of improvement in international financial conditions
(yields in %, last value 04/07/09)
Note: (1) EM Corporate = Credit Suisse Corporate Bond. (2) EM Sovereign = JP Morgan EMBI+ Sovereign. (3) US Junk= MSCI High Yield Bonds.
Note: Terms of trade series include Argentina, Brazil, Chile, Colombia, Mexico and Peru. Simple average.
Source: IADB and Bloomberg.
(Based on Calvo, Izquierdo and Mejia, NBER Working Paper 14026, 2007)
Notes: Simple country averages. LAC7 includes Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. CAC5 includes Costa Rica, Guatemala, Honduras, Nicaragua and Dominican Republic. Eastern Europe includes Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Turkey.
India. International Reserves’ Accumulation and Seigniorage
(quarterly data, Billions of USD, q-o-q change, last value 2008-QI)
Correlation = 0.8*
Note: Correlation coefficient statistically significant at 1% level.
US Great Depression
EM Collapses & the US Great Depression: Similarities
- Bank Credit -
(Average Credit to the Private to Credit to the Public Sector ratio*, trough (t)=100)
Note: Public sector includes only the Central Government.
Source: Own estimates base of the IMF-IFS data.
Note: e = estimate / f = forecast.
(y-o-y % change)
(y-o-y % growth rate)