College of Behavioral & Social Sciences
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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..
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Item Inflation Stabilization and BOP Crises in Developing Countries(Elsevier, 1999) Calvo, Guillermo A.; Végh, Carlos A.High and persistent inflation has been one of the distinguishing macroeconomic characteristics of many developing countries - particularly in Latin America - since the end of World War II. Pazos (1972) coined the term "chronic inflation" to refer the this phenomenon. In his view, chronic inflation is quite a different creature from the much more spectacular hyperinflations studied by Cagan (1956). First, unlike hyperinflations whose duration is measured in terms of months, chronic inflation may last for decades. Second, countries learn how to live with high and persistent inflation by creating various indexation mechanisms which, in turn, tend to perpetuate the inflationary process. As a result, inflation does not have an inherent propensity to accelerate and, if it does, soon reaches a new plateau.Item Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops(Journal of Applied Economics, 1998-11) Calvo, Guillermo A.The paper studies mechanisms through which a sudden stop in international credit flows may bring about financial and balance of payments crises. It is shown that these crises can occur even though the current account deficit is fully financed by foreign direct investment. However, equity and long-term bond financing may shield the economy from sudden stop crises. The paper also examines possible factors that could trigger sudden stops, and argues that the greater independence that countries have, as compared to regions of a given country, could help to explain why sudden stop crises are more prevalent and destructive at international than at national levels.Item Balance of Payment Crises In Emerging Markets: Large Capital Inflows and Sovereign Governments(1998-03-15) Calvo, Guillermo A.The paper shows that the combination of large capital inflows and sovereign governments could give rise to self-fulfilling balance of payments crises. It argues that a current account deficit could impair the resolution of such crises, but the crises themselves could occur even though the current account was in balance. The key is a weak financial sector, possibly made so by an accommodating central bank. In contrast with most of the literature on this subject, the paper endogenizes output and discusses the channels (New Classical and Keynesian) through which a BOP crisis can result in output collapse. Building on a Time to Build model, the paper shows that a growth slowdown can take place even though a BOP crisis brings about no current account reversal.