Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/51445 
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dc.contributor.authorMiller, Marcusen
dc.contributor.authorZhang, Leien
dc.date.accessioned2010-02-23-
dc.date.accessioned2011-11-18T11:47:35Z-
dc.date.available2011-11-18T11:47:35Z-
dc.date.issued2007-
dc.identifier.urihttp://hdl.handle.net/10419/51445-
dc.description.abstractThis paper proposes an integrated framework to analyze jointly two key issues: the emergence of global imbalances and the precautionary motive for accumulating reserves. Standard models of general equilibrium would predict modest current account surpluses in the emerging markets if they face higher risk than the US itself. But, with pronounced Loss Aversion in emerging markets, their precautionary savings can generate substantial 'global imbalances', especially if there is an inefficient supply of global 'insurance'. In principle, lower real interest rates will ensure that aggregate demand equals supply at a global level (though the required real interest may be negative). While a precautionary savings glut appears to be a temporary phenomenon, a process of correction triggered by a 'Sudden Stop' in capital flows to the United States might lead to a 'hard landing'.en
dc.language.isoengen
dc.publisher|aInter-American Development Bank, Research Department |cWashington, DCen
dc.relation.ispartofseries|aWorking Paper |x593en
dc.subject.jelD51en
dc.subject.jelD52en
dc.subject.jelE12en
dc.subject.jelE13en
dc.subject.jelE21en
dc.subject.jelE44en
dc.subject.jelF32en
dc.subject.ddc330en
dc.subject.keywordstochastic dynamic general equilibriumen
dc.subject.keywordloss aversionen
dc.subject.keywordliquidity trapen
dc.titleFear and market failure: Global imbalances and self-insurance”-
dc.typeWorking Paperen
dc.identifier.ppn585535442en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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