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International Financial Issues in the Pacific RimGlobal Imbalances, Financial Liberalization, and Exchange Rate Policy$
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Takatoshi Ito and Andrew K. Rose

Print publication date: 2008

Print ISBN-13: 9780226386829

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226387086.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 25 September 2021

Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses

Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses

A Theory and Evidence from East Asia

(p.39) 2 Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses
International Financial Issues in the Pacific Rim
Shin-ichi Fukuda, Yoshifumi Kon
University of Chicago Press

This chapter explores some theoretical and empirical implications of the changed international capital flows in East Asian economies after the currency crisis. It shows that macroeconomic impacts will vary depending on which strategy developing countries take for self-protection. The first paper of the chapter investigates what impacts an increased aversion to liquidity risk can have on current accounts and the other macroeconomic variables in a simple open economy model. The second part provides some empirical evidence in East Asia that supports the theoretical implications. In particular, it focuses on the changes of foreign debt maturity structures and their implications in East Asian economies.

Keywords:   capital flows, East Asia, currency crisis, macroeconomic variables, liquidity risk, foreign debt, debt maturity, East Asian economies

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