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    Capital inflows, crisis and recovery in small open economies

    Raza, H. and Kinsella, S. and Zoega, Gylfi (2018) Capital inflows, crisis and recovery in small open economies. Finance Research Letters 27 , pp. 273-282. ISSN 1544-6123.

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    Abstract

    We compare two small open economics, Iceland and Ireland, that experienced a capital inflow through their banking systems in the period preceding the 2008 financial crises but differ in their currency arrangements. Both countries have mostly recovered from their respective crises, but the differences in the way their economies adjusted are interesting. The evidence suggests that changes in the real exchange rate served as the adjusting mechanism for Iceland's current account while in Ireland domestic demand compression served as the main adjustment mechanism. We also explore the adjustment to the crisis in three other Eurozone economies and find that they were similar to the one in Ireland.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Sudden stop, Real exchange rates, Demand compression
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Gylfi Zoega
    Date Deposited: 04 Nov 2019 09:07
    Last Modified: 05 Nov 2019 04:00
    URI: http://eprints.bbk.ac.uk/id/eprint/29721

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