News Column

Findings from International Monetary Fund Provide New Insights into Macroeconomics (Sudden Stops, Output Drops, And Credit Collapses)

August 8, 2014



By a News Reporter-Staff News Editor at Economics Week -- Investigators publish new report on Macroeconomics. According to news reporting from Washington, District of Columbia, by VerticalNews editors, the research stated, "This paper proposes a tractable sudden stop model to explain the main patterns in firm-level data from a sample of Southeast Asian firms during the Asian crisis. The model incorporates trend shocks and financial frictions, features that have so far been used separately in the literature on emerging markets."

The news correspondents obtained a quote from the research from International Monetary Fund, "A negative shock to trend productivity growth can account, in our model, for the drop in output and its swift recovery together with the sizable and persistent downward adjustment in firms' Tobin's Q and debt levels. These patterns are broadly shared by most sudden stop episodes as documented in the literature."

According to the news reporters, the research concluded: "Trend shocks can also generate, in our model, strong leverage effects in line with the firm-level data and other observations from the literature."

For more information on this research see: Sudden Stops, Output Drops, And Credit Collapses. Macroeconomic Dynamics, 2014;18(4):812-837. Macroeconomic Dynamics can be contacted at: Cambridge Univ Press, 32 Avenue Of The Americas, New York, NY 10013-2473, USA. (Cambridge University Press - www.cambridge.org; Macroeconomic Dynamics - journals.cambridge.org/action/displayJournal?jid=MDY)

Our news journalists report that additional information may be obtained by contacting J.C. Dagher, Int Monetary Fund, Washington, DC 20234, United States.

Keywords for this news article include: Washington, United States, Macroeconomics, District of Columbia, North and Central America

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Source: Economics Week


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