Hot Money
Bibliographic Data
| ID | 10179642 |
|---|---|
| Authors | V Chari (0000-0002-7425-8739, Federal Reserve Bank of Minneapolis), V V Chari, Patrick J Kehoe (0000-0001-5738-1236, Federal Reserve Bank of Minneapolis) |
| Year | 2003 |
| Volume | 111 |
| Issue | 6 |
| Pages | 1262-1292 |
| Publication date | 2003-11-14 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/378525 |
| OpenAlex | W4243799980 |
| Language | EN |
| Citations received | 7 |
| References cited | 16 |
Recent empirical work on financial crises documents that crises tend to occur when macroeconomic fundamentals are weak; but even after conditioning on an exhaustive list of fundamentals, a sizable random component to crises and associated capital flows remains. We develop a model of herd behavior consistent with these observations. Informational frictions together with standard debt default problems lead to volatile capital flows resembling hot money and financial crises. We show that repaying debt during difficult times identifies a government as financially resilient, enhances its reputation, and stabilizes capital flows. Bailing out governments deprives resilient countries of the opportunity to differentiate themselves from the nonresilient
Capital (architecture · Capital flows · Debt · Economics · Government (linguistics · Macroeconomics · Microeconomics · Monetary economics · Reputation · Work (physics · Banking stability, regulation, efficiency · Economic theories and models · Global Financial Crisis and Policies
The National Banking Acts and the Transformation of New York City Banking During the Civil War Era
Causal links between hot money and investment markets
Time-varying character for short-term capital flow from the interest rate aspect in China
Theoretical and experimental evidence on stock market volatilities
Market expectation management and renminbi exchange rate policy under depreciation pressure
Explaining Migration Timing
Economic coercion and currency crises in target countries
| Citations per year | 0.47 |
|---|---|
| Citation span | 2011 - 2023 (13) |
| Highly cited | No |