Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses

Edited by Shin-ichi Fukuda and Yoshifumi Kon

in International Financial Issues in the Pacific Rim

Published by University of Chicago Press

Published in print August 2008 | ISBN: 9780226386829
Published online February 2013 | e-ISBN: 9780226387086 | DOI:
Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses

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This chapter explores some theoretical and empirical implications of the changed international capital flows in East Asian economies after the currency crisis. It shows that macroeconomic impacts will vary depending on which strategy developing countries take for self-protection. The first paper of the chapter investigates what impacts an increased aversion to liquidity risk can have on current accounts and the other macroeconomic variables in a simple open economy model. The second part provides some empirical evidence in East Asia that supports the theoretical implications. In particular, it focuses on the changes of foreign debt maturity structures and their implications in East Asian economies.

Keywords: capital flows; East Asia; currency crisis; macroeconomic variables; liquidity risk; foreign debt; debt maturity; East Asian economies

Chapter.  11883 words.  Illustrated.

Subjects: Business and Management

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