Jump to ContentJump to Main Navigation
Volatility and Growth$
Users without a subscription are not able to see the full content.

Philippe Aghion and Abhijit Banerjee

Print publication date: 2005

Print ISBN-13: 9780199248612

Published to Oxford Scholarship Online: January 2007

DOI: 10.1093/acprof:oso/9780199248612.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see www.oxfordscholarship.com/page/privacy-policy).date: 20 June 2019

Endogenous Volatility in an Open Economy

Endogenous Volatility in an Open Economy

Chapter:
(p.68) 4 Endogenous Volatility in an Open Economy
Source:
Volatility and Growth
Author(s):

Phillippe Aghion (Contributor Webpage)

Abhijit Banerjee (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199248612.003.0006

This chapter argues that financial liberalization introduces a new problem: Now the real exchange rate, which is the relative price between nontradable and tradable, becomes a source of instability. It goes up in a boom, squeezing profits, which limits borrowing and hence investment and brings the economy down. The fact that the economy is open to capital inflows may actually make things worse, since it allows investment demand to grow very fast in a boom.

Keywords:   real exchange rate, instability, lending boom, capital account liberalization

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .