Financial Stability of a Small Open Economy Under Credit Constraints

2004 ◽  
Author(s):  
Gongpil Choi
Keyword(s):  
Open Economy ◽  
Financial Stability ◽  
Credit Constraints ◽  
Small Open Economy

scholarly journals Financial security of a small open economy in conditions of globalization as a requirement for economic growth

2019 ◽  
pp. 9-24
Author(s):  
Piotr Komorowski
Keyword(s):  
Economic Growth ◽  
Open Economy ◽  
Financial Stability ◽  
Small Open Economy ◽  
Economic Security ◽  
The State ◽  
Financial Security ◽  
Special Significance

In the conditions of the globalization of economies the issue of financial stability, which is a condition for the economic security of the state, has acquired a special significance. The aim of the article is to determine the importance of the role of financial stability for maintaining economic security and economic growth and to validate the role of the Safety Network Institution in maintaining stability.

scholarly journals Overborrowing and Systemic Externalities in the Business Cycle

2011 ◽  
Vol 101 (7) ◽  
pp. 3400-3426 ◽  
Author(s):  
Javier Bianchi
Keyword(s):  
Quantitative Analysis ◽  
Open Economy ◽  
Financial Crises ◽  
Credit Constraints ◽  
Small Open Economy ◽  
Dynamic Stochastic General Equilibrium ◽  
Constrained Efficiency ◽  
Dynamic Stochastic ◽  
The Business Cycle ◽  
The Cost

Credit constraints linking debt to market-determined prices embody a systemic credit externality that drives a wedge between competitive and constrained socially optimal equilibria, inducing private agents to overborrow. This externality arises because private agents fail to internalize the financial amplification effects of carrying a large amount of debt when credit constraints bind. We conduct a quantitative analysis of this externality in a two-sector dynamic stochastic general equilibrium (DSGE) model of a small open economy calibrated to emerging markets. Raising the cost of borrowing during tranquil times restores constrained efficiency and significantly reduces the incidence and severity of financial crises. JEL: E13, E32, E44, F41, G01

scholarly journals EUROZATION IN BOSNIA AND HERZEGOVINA - BARRIES AND OPPORTUNITIES FOR INTEGRATION

2018 ◽  
pp. 372-381
Keyword(s):  
Economic Growth ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Financial Stability ◽  
Banking Sector ◽  
Small Open Economy ◽  
Business Environment ◽  
Bank Deposits ◽  
Monetary Regime ◽  
Before And After

Preconditions of the economic growth of the small, open economy are stable and strong currency, favourable business environment and financial stability. Financial and monetary stability is one of the key presumptions of economic growth. Bosnia and Herzegovina in financial system record significant level of eurozation. There are many reasons for eurozation in national economy. Bank deposits and loans are denominated in euro, national currency is fixed to euro through monetary regime currency board. The objective of the paper is to provide conceptual framework of eurozation and to analyse level of eurozation in Bosnia and Herzegovina. Authors in paper will analyses economic development and changes in banking sector in condition of eurozation in period before and after financial crisis.

scholarly journals Analysis of monetary regulation of the investment sphere in the Republic of Belarus

2021 ◽  
Vol 107 ◽  
pp. 09001
Author(s):  
Marina Zelenkevich ◽  
Natallia Bandarenka
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Open Economy ◽  
Financial Stability ◽  
Developing Economies ◽  
Small Open Economy ◽  
Price Stability ◽  
Practical Implementation ◽  
The Republic ◽  
The Impact

The purpose of the article is to substantiate the possibility and necessity of the central bank’s monetary policy to stimulate investment and economic growth for developing economies on the example of the investment sphere and monetary policy in Belarus. It was determined that the impact of monetary regulation on investment and economic growth is achieved in the course of the central bank’s activities to maintain indicators of price and financial stability which reflect favourable conditions for investment. Price stability is achieved through the implementation of various central bank strategies such as targeting the exchange rate, money supply and inflation. These strategies are defined as the objectives of monetary policy. The article discusses the advantages of monetary regulation in comparison with fiscal regulation, and also contains an analysis of its practical implementation in the Republic of Belarus in the period 2000–2019. As a result of the study the economic and financial results of the strategies applied at different stages were determined, their consequences for the economy were substantiated, and the strategies that best affect the financial and economic indicators in the country were identified. For countries with a small open economy which includes Belarus maintaining price and financial stability is complemented by a set of measures to reduce the devaluation expectations of market entities and create a favorable foreign economic environment.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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