Asset bubbles and sudden stops in a small open economy

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• dc.contributor.author Martin, Alberto, 1974-ca
• dc.contributor.author Ventura, Jaumeca
• dc.date.accessioned 2017-04-28T11:50:15Z
• dc.date.available 2017-04-28T11:50:15Z
• dc.date.issued 2015
• dc.description.abstract We live in a new world economy characterized by financial globalization and historically low interest rates. This paper presents a simple analytical framework that helps us understand how this new world economy works from the perspective of an emerging economy. Financial globalization gives rise to episodes of large capital inflows followed by sudden stops. Low international interest rates give rise to asset bubbles that pop and burst. The analysis provides novel answers to old questions: What are the effects of asset bubbles on capital flows and macroeconomic performance? How do these effects vary in normal times and during sudden stops? How should policymakers manage capital flows in this new environment?
• dc.description.sponsorship We acknowledge support from the Spanish Ministry of Science and Innovation (grant ECO2011-23197), and the Generalitat de Catalunya AGAUR (grant 2014SGR-830). In addition, Ventura acknowledges support from the ERC (Advanced Grant FP7-249588-ABEP), and Martin the ERC (Consolidator Grant FP7-615651-MacroColl), and the IMF Research Fellowship.
• dc.format.mimetype application/pdfca
• dc.identifier.citation Martin A, Ventura J. Asset bubbles and sudden stops in a small open economy. In: Raddatz C, Saravia D, Ventura J, editors. Global liquidity, spillovers to emerging markets and policy responses. Santiago (Chile): Banco Central de Chile; 2015. p.315-41.
• dc.identifier.uri http://hdl.handle.net/10230/30931
• dc.language.iso eng
• dc.publisher Banco Central de Chile
• dc.relation.ispartof Global liquidity, spillovers to emerging markets and policy responses. Santiago (Chile): Banco Central de Chile; 2015. p.315-41.
• dc.relation.projectID info:eu-repo/grantAgreement/EC/FP7/615651
• dc.relation.projectID info:eu-repo/grantAgreement/EC/FP7/249588
• dc.relation.projectID info:eu-repo/grantAgreement/ES/3PN/ECO2011-23197
• dc.rights © 2015 Central Bank of Chile.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.title Asset bubbles and sudden stops in a small open economyca
• dc.type info:eu-repo/semantics/bookPart
• dc.type.version info:eu-repo/semantics/acceptedVersion