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dc.contributor.authorCalvo, Guillermo A.en_US
dc.contributor.authorIzquierdo, Alejandroen_US
dc.contributor.authorTalvi, Ernestoen_US
dc.description.abstractUsing a sample of emerging markets that are integrated into global bond markets, we analyze the collapse and recovery phase of output collapses that coincide with systemic sudden stops, defined as periods of skyrocketing aggregate bond spreads and large capital flow reversals. Our findings indicate the presence of a very similar pattern across different episodes: output recovers with virtually no recovery in either domestic or foreign credit, a phenomenon that we call a Phoenix Miracle, where output 'rises from its ashes', suggesting that firms go through a process of financial engineering to restore liquidity outside formal credit markets. Moreover, we show that the U.S. Great Depression could be catalogued as a Phoenix Miracle. However, in contrast to the U.S. Great Depression, EM output collapses occur in a context of accelerating price inflation and falling real wages, casting doubt on price deflation and nominal wage rigidity as key elements in explaining output collapse, and suggesting that financial factors figure prominently in these collapses.en_US
dc.publisher|aInter-American Development Bank, Research Dep. |cWashington, DCen_US
dc.relation.ispartofseries|aWorking paper // Inter-American Development Bank, Research Department |x570en_US
dc.subject.keywordOutput collapseen_US
dc.subject.keywordsystemic crisesen_US
dc.subject.keywordGreat Depressionen_US
dc.subject.keywordBalance of Payments crisisen_US
dc.subject.keywordSudden Stopen_US
dc.subject.keywordcapital flowsen_US
dc.subject.keywordPhoenix Miracleen_US
dc.subject.keywordcredit crunchen_US
dc.titlePhoenix miracles in emerging markets: Recovering without credit from systemic financial crisesen_US
dc.typeWorking Paperen_US

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