{"title":"The crisis.","authors":"J. J. Ravenel","doi":"10.2307/j.ctvbcd184.24","DOIUrl":null,"url":null,"abstract":"Credit market imperfections have been blamed for the depth and persistence of the Great Depression in the USA. Could similar mechanisms have played a role in ending the East Asian miracle? After a brief account of the nature of the recent crises, we use a model of highly levered creditconstrained firms due to Kiyotaki and Moore (1997) to explore this question. As applied to land-holding property companies, it predicts greatly amplified responses to financial shocks like the ending of the land price bubble or the fall of the exchange rate. The initial fall in asset values is followed by the ‘knockon’ effects of the scramble for liquidity as companies sell land to satisfy their collateral requirements causing land prices to fall further. This could lead to financial collapse where like falling dominoes prudent firms are brought down by imprudent firms. Key to avoiding collapse is the nature of financial stabilisation policy; in a crisis, temporary financing can prevent illiquidity becoming insolvency and launching ‘lifeboats’ can do the same. But the vulnerability of financial systems like those in East Asia to short-term foreign currency exposure suggests that preventive measures are also required.","PeriodicalId":86283,"journal":{"name":"Transactions. American Urological Association. Southeastern Section","volume":"41 1","pages":"79-81"},"PeriodicalIF":0.0000,"publicationDate":"2019-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Transactions. American Urological Association. Southeastern Section","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2307/j.ctvbcd184.24","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
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Abstract

Credit market imperfections have been blamed for the depth and persistence of the Great Depression in the USA. Could similar mechanisms have played a role in ending the East Asian miracle? After a brief account of the nature of the recent crises, we use a model of highly levered creditconstrained firms due to Kiyotaki and Moore (1997) to explore this question. As applied to land-holding property companies, it predicts greatly amplified responses to financial shocks like the ending of the land price bubble or the fall of the exchange rate. The initial fall in asset values is followed by the ‘knockon’ effects of the scramble for liquidity as companies sell land to satisfy their collateral requirements causing land prices to fall further. This could lead to financial collapse where like falling dominoes prudent firms are brought down by imprudent firms. Key to avoiding collapse is the nature of financial stabilisation policy; in a crisis, temporary financing can prevent illiquidity becoming insolvency and launching ‘lifeboats’ can do the same. But the vulnerability of financial systems like those in East Asia to short-term foreign currency exposure suggests that preventive measures are also required.
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这场危机。
信贷市场的不完善被认为是造成美国经济大萧条的深度和持久性的原因。在终结东亚奇迹的过程中,类似的机制是否起到了作用?在简要介绍了最近几次危机的性质之后,我们使用Kiyotaki和Moore(1997)提出的高杠杆信贷约束公司模型来探讨这个问题。将其应用于持有土地的房地产公司时,它预测对地价泡沫结束或汇率下跌等金融冲击的反应将大大放大。资产价值最初下跌之后,随着企业出售土地以满足抵押品要求,对流动性的争夺产生了“连锁”效应,导致土地价格进一步下跌。这可能导致金融崩溃,就像多米诺骨牌一样,谨慎的公司被不谨慎的公司击倒。避免崩溃的关键在于金融稳定政策的性质;在危机中,临时融资可以防止流动性不足变成资不抵债,启动“救生艇”也可以做到这一点。但东亚等金融体系在短期外汇风险敞口面前的脆弱性表明,还需要采取预防措施。
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