NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Managing Macroeconomic Crises

Jeffrey A. Frankel, Shang-Jin Wei

NBER Working Paper No. 10907
Issued in November 2004
NBER Program(s):   IFM

This study reviews broadly the experience of the last decade on crisis prevention and management. It seeks to draw greater attention to policy decisions that are made during the phase when capital inflows come to a sudden stop. Procrastination---the period of financing a balance of payments deficit rather than adjusting---had serious consequences in some cases. Crises are more frequent and more severe when short-term borrowing and dollar denomination external debt are high, and foreign direct investment (FDI) and reserves are low, in large part because balance sheets are then very sensitive to increases in exchange rates and short-term interest rates. If countries that are faced with a fall in inflows adjusted more promptly, rather than stalling for time by running down reserves or shifting to loans that are shorter-termed and dollar-denominated, they might be able to adjust on more attractive terms.

download in pdf format
   (685 K)

email paper

This paper is available as PDF (685 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10907

Published: Aizenman, Joshua and Brian Pinto (eds.) Managing Economic Volatility and Crises: A Practitioner’s Guide. Cambridge: Cambridge University Press, 2005.

Users who downloaded this paper also downloaded these:
Radelet and Sachs w6680 The Onset of the East Asian Financial Crisis
Aizenman and Pinto w10602 Managing Volatility and Crises: A Practitioner's Guide Overview
Barro and Ursua w13940 Macroeconomic Crises since 1870
Frankel and Saravelos w16047 Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from the 2008-09 Global Crisis
Wei and Wu w8611 Globalization and Inequality: Evidence from Within China
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us