The Role of Expectations in Sudden Stops

dc.contributor.author	MERTENS, Karel
dc.date.accessioned	2007-10-03T15:22:51Z
dc.date.available	2007-10-03T15:22:51Z
dc.date.issued	2007
dc.identifier.issn	1725-6704
dc.identifier.uri	http://hdl.handle.net/1814/7103
dc.description.abstract	This paper presents a flexible-price small open economy model with a “peso problem” in productivity states. Agents rationally adjust their beliefs about future productivity growth after the arrival of news. A downward revision of expectations triggers Sudden Stop, together with large declines in GDP, employment, consumption and investment. There need not be any actual change in productivity growth to generate large fluctuations. Quantitatively, the model goes a long way in matching the 1998 Korean Crisis and subsequent swift recovery.	en
dc.language.iso	en	en
dc.publisher	European University Institute
dc.relation.ispartofseries	EUI ECO	en
dc.relation.ispartofseries	2007/16	en
dc.subject	E2	en
dc.subject	E3	en
dc.subject	F3	en
dc.subject	F4	en
dc.subject	sudden stops	en
dc.subject	small open economy	en
dc.subject	expectations	en
dc.subject	peso problem	en
dc.title	The Role of Expectations in Sudden Stops	en
dc.type	Working Paper	en
dc.neeo.contributor	MERTENS\|Karel\|aut\|
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