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| Author: | Goldstein, I. |
| Title: | Strategic complementarities and the twin crises |
| Journal: | Economic Journal
2005 : APR, VOL. 115:503, p. 368-390 |
| Index terms: | Banking Financial crises |
| Language: | eng |
| Abstract: | This article examines the role of strategic complementarities in generating banking crises and currency crises. The writer studies a model, where strategic complementarities exist, not only within a group of creditors of within a group of currency speculators, but also between the two groups. This additional type of complementarities creates a vicious circle between banking crises and currency crises. The writer shows that, due to the vicious circle, a Lender of Last Resort may not be able to prevent bank runs. |
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