I study the role of credit ratings in crises by introducing a financial market in a coordination game with borrowers that must rollover their debts. The asset price aggregates dispersed private information acting as a public noisy signal. Credit rating agencies use this price to set their ratings. Moreover, agencies know that credit ratings influence lending decisions, thus affecting the credit...

This paper examines the impact of political uncertainty on financial crises using a panel of twenty-two emerging markets. By examining political election cycles, we find that eight out of nine of the financial crises happened during the periods of political election and transition. Using a combination of probit and switching regression analysis, we find that there is a significant relationship ...

This paper argues, first, that, despite some similarities, financial crises in the 1990s have featured substantial differences between them: the ERM crisis of 1992-93 was mainly due to stringent monetary policies; the Mexican crisis of 1994-95 was associated to private overconsumption; and the East Asian crises of 1997-99 were basically the result of private overinvestment. Therefore, as crises...

The global economic and financial instability context of the 1990s and 2000s also affected the Turkish economy. Actually, the 1980s in Turkey are characterized by a radical transformation of its economy through significant efforts of liberalization. With an outlooking economy and a liberalized financial system in the early 1990s, Turkey was an example of successful liberalization process for th...

This appendix describes how we derive our new semiannual measure of financial distress for a sample of advanced economies for the period 1967 to 2007. As discussed in the paper, our approach follows others in the literature in relying on qualitative evidence about financial conditions in each country. A key feature of our approach is the use of a consistent real-time source of this information....

We provide one of the first tests of recent macro global-game crisis models that show that the precision of public signals can coordinate crises (e.g. Angeletos and Werning 2006; Morris and Shin 2002, 2003). In these models, self-fulfilling crises (independent of fundamentals) can occur only when publicly disclosed fundamental signals have high precision; fundamentals are thus the sole driver o...

The rapidly evolving global economy as well as new challenges with economic and social implications make the problem of financial crises, including currency crises, extremely important in the current situation. Especially given the fact that the crises affect various countries and regions of the world. Serious currency crashes have occurred in developing countries with marked structural problem...