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Financial crises

Solving the Latin American debt crisis of the 1980s involved writing off some of the debt owed to foreign banks and replacing the rest with sovereign bonds, so called Brady Bonds. How would widely dispersed and anonymous bond holders (not subject to government control as banks usually are) react when the country fails to service its debt on time? To answer this, Marcus Miller, William Perraudin (Birkbeck College), and Jonathan Thomas have ESRC Funding for a project on "A Bankruptcy Code for Sovereign Borrowers". So far, this project which also involves has examined the role the IMF might play in authorising an official standstill of payments (subject to the usual rules of IMF "conditionality") designed to avoid a creditor race where fearful bondholders try to grab a country's assets (Miller and Zhang, 1998, CEPR DP 1820).

More recently the focus has been the East Asian crisis which also involves short-term debt, including bank debt, though this is private not sovereign. The role of bursting asset bubbles on the stability of the financial system has been the focus of a paper by Edison, Luangaram and Miller (CSGR Working Paper 05/98). How bank runs may trigger a speculative attack on a currency is also discussed by the last two authors in a survey of Financial Crisis in East Asia, forthcoming as a CSGR Working Paper. The origins of the East Asian crisis and ways of avoiding and or containing repeat performances are to be discussed at an international conference on World Financial Markets and Financial Crises being held at Warwick on July 24 and 25 with the administrative support of CEPR.

 

Output:

 

Publications and Working Papers

'Asset Bubbles, Domino Effects and "Lifeboats": Elements of the East Asian Crisis' (with Hali J. Edison and Pongsak Luangaram), The Economic Journal, January 2000, vol. 110. Also available as CSGR Working Paper No.5. Abstract, Full document PDF icon

Foereign Liquidity Crises: the Strategic Case for a Payments Standstill' (with Lei Zhang), The Economic Journal, January 2000, vol. 110. Also available as CEPR Discussion Paper No. 1820, February 1998, and CSGR Working Paper. Abstract, Full Document PDF icon

'Coping with Crises: Is there a Silver Bullet?' (with Amar Bhattacharya). Forthcoming in P. Agenor et al. (eds.) The Asian Financial Crisis, Cambridge University Press, 1999.

'Financial Crisis in East Asia: Bank Runs, Asset Bubbles and Antidotes' (with Pongsak Luangaram), National Institute Economic Review, 165 (1998), 66-82. Abstract, Full document PDF icon

'Bankruptcy Protection Against Macroeconomics Shocks: The case for a 'super Chapter 11'' (with Joseph Stiglitz). Presented at a Conference on Capital Flows, Financial Crisis and Policies at the World Bank, 15/16 April 1999. Full document PDF icon

'Sequencing of Capital Account Liberalisation: A Challenge to the Washington Consensus?' (with Lei Zhang), July 1999. Full document PDF icon

'Are there sharks in the South China Sea?" Strategic aspects of the attack on the Hong Kong Dollar'. Presented at Global Development Finance Seminar on Capital flows in crisis, Washington D.C. 27/28 October 1998. Full document PDF icon

'Leverage and the LTCM rescue'. Presented at Global Development Finance Seminar on Capital flows in crisis, Washington D.C. 27/28 October 1998. Full document PDF icon

'Creditor Panic, Asset Bubbles and Sharks: Two Views of the Asian Crisis' (with Lei Zhang), paper presented at the British Association Meetings, Cardiff, September 1998. Full document PDF icon

'Macroeconomic Policy Options for Managing Capital Flows' (with Lei Zhang), paper presented to EDI/World Bank seminar, Shanghai, July 1998. Full document PDF icon

'Lifting the Laffer Curve: Moral Hazard and Brady Bonds' (with Paul Gruenwald), mimeo, IMF, November 1997.

 

Book

The Asian Financial Crisis: Causes, Contagion and Consequences, P. Agenor, M. Miller, D. Vines and A.Weber, Cambridge University Press, 1999. More information from CUP's website.