Consequences of Asset Shortages in Emerging Markets

44 Pages Posted: 27 Aug 2012

See all articles by Patrick A. Imam

Patrick A. Imam

International Monetary Fund (IMF); Joint Vienna Institute

Jiaqian Chen

International Monetary Fund (IMF)

Date Written: April 2012

Abstract

We assess econometrically the impact of asset shortages on economic growth, asset bubbles, the probability of a crisis, and the current account for a group of 41 Emerging markets for 1995-2008. The econometric estimations confirm that asset shortages pose a serious danger to EMs in terms of reducing economic growth, raising the probability of a crisis, and leading to asset price bubbles. Moreover, asset shortages can also explain the current account positions of EMs. The findings suggest that the consequences of asset shortages for macroeconomic stability are significant, and must be tackled urgently. We conclude with policy implications.

Keywords: Asset Shortage, Emerging Market, Crisis, Asset Bubble, Economic Growth, Economic Models, financial assets, current account, bond, bonds, asset bubbles, current account balance, domestic savings, current account surpluses, corporate bond, domestic currencies, international country risk guide, stock market, government deficit, domestic investors, corporate bonds, bond issuance, sovereign bonds, government debt, international financial statistics, current account surplus, balance of payments, external debt, capital account liberalization, bond markets, government bonds, domestic corporate bonds, domestic investor, public debt, financial stability, domestic debt, current account balances, domest

JEL Classification: E22, E40, G00

Suggested Citation

Imam, Patrick A. and Chen, Jiaqian, Consequences of Asset Shortages in Emerging Markets (April 2012). IMF Working Paper No. 12/102, Available at SSRN: https://ssrn.com/abstract=2135980

Patrick A. Imam

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Joint Vienna Institute ( email )

Mariahilferstrasse 97
Vienna, A-1060
Austria

Jiaqian Chen

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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