Structural Vulnerabilities and Currency Crises

This paper examines the role of structural factors - governance and rule of law, corporate sector governance (creditor rights and shareholder rights), corporate financing structure - as well as macroeconomic variables in currency crises. Using a technique known as a binary recursive tree allows for interactions between the various explanatory variables. It is found that structural vulnerabilities play an important role in the occurrence of "deep" currency crises (those with a real GDP growth decline of at least 3 percentage points) and that there are complex interactions between these structural vulnerabilities and macroeconomic imbalances. Copyright 2003, International Monetary Fund

Quantisation of second class systems in the Batalin-Tyutin formalism

We review the Batalin-Tyutin approach of quantising second class systems which consists in enlarging the phase space to convert such systems into first class. The quantisation of first class systems, it may be mentioned, is already well founded. We show how the usual analysis of Batalin-Tyutin may be generalised, particularly if one is dealing with nonabelian theories. In order to gain a deeper insight into the formalism we have considered two specific examples of second class theories-- the massive Maxwell theory (Proca model) and its nonabelian extension. The first class constraints and the involutive Hamiltonian are explicitly constructed. The connection of our Hamiltonian approach with the usual Lagrangian formalism is elucidated. For the Proca model we reveal the importance of a boundary term which plays a significant role in establishing an exact identification of the extra fields in the Batalin-Tyutin approach with the St\"uckelberg scalar. Some comments are also made concerning the corresponding identification in the nonabelian example.Comment: 26 pages, Latex file, e-mail [email protected] SINP-TNP/94-

East Asia in the aftermath: Was there a crunch?

This paper investigates whether there was a credit crunch in East Asia during the recent financial and economic crises. Motivated by widespread concern that, over and above any increases in real interest rates, corporates may have also faced credit rationing, we adopt an explicit disequilibrium framework for analyzing the behavior of real credit with a view to assessing whether the supply of, or demand for credit has been a binding constraint. The findings highlight the dynamics associated with a credit crunch. We find evidence of a »credit crunch« in all three crisis countries (Indonesia, Korea, Thailand) in the period immediately following the crisis as the banking system distress deepened, and the supply of (real) credit declined. Thereafter, however, credit demand also fell sharply as economic recession took hold and corporate bankruptcies increased. By the end of the first quarter of 1998, therefore, the constraining factor was the demand for credit. We conclude that, beyond the initial crisis period, there is little evidence of a credit crunch at the aggregate level, although high real interest rates - and credit rationing of individual firms - may have continued to contribute to the difficulties of the corporate sector. --emerging markets,credit crisis