TY - BOOK ID - 11265156 TI - Are asset price guarantees useful for preventing sudden stops? : a quantitative investigation of the globalization hazard-moral hazard tradeoff AU - Durdu, Ceyhun Bora. AU - Mendoza, Enrique G. AU - International Monetary Fund. PY - 2006 SN - 1451863330 1462337708 1451908695 9786613830630 1452708789 128351818X PB - [Washington, D.C.] : International Monetary Fund, Research Dept., DB - UniCat KW - Economic policy. KW - Electronic books. -- local. KW - Globalization. KW - Commerce KW - Business & Economics KW - International Commerce KW - Global cities KW - Globalisation KW - Internationalization KW - Economic nationalism KW - Economic planning KW - National planning KW - State planning KW - International relations KW - Anti-globalization movement KW - Economics KW - Planning KW - National security KW - Social policy KW - Exports and Imports KW - Finance: General KW - Investments: Stocks KW - Macroeconomics KW - International Investment KW - Long-term Capital Movements KW - Pension Funds KW - Non-bank Financial Institutions KW - Financial Instruments KW - Institutional Investors KW - Price Level KW - Inflation KW - Deflation KW - Macroeconomics: Consumption KW - Saving KW - Wealth KW - General Financial Markets: Government Policy and Regulation KW - International economics KW - Investment & securities KW - Finance KW - Sudden stops KW - Stocks KW - Asset prices KW - Consumption KW - Moral hazard KW - Capital movements KW - Prices KW - Financial risk management KW - Mexico UR - https://www.unicat.be/uniCat?func=search&query=sysid:11265156 AB - An implication of the "globalization hazard" hypothesis is that sudden stops could be prevented by offering foreign investors price guarantees on emerging markets assets. These guarantees create a tradeoff, however, because they weaken globalization hazard by creating international moral hazard. We study this tradeoff using an equilibrium asset-pricing model. Without guarantees, margin calls and trading costs cause Sudden Stops driven by Fisher's debt-deflation process. Price guarantees prevent this deflation by propping up foreign asset demand, but their effectiveness and welfare implications depend critically on the price elasticity of foreign demand and on making the guarantees contingent on debt levels. ER -