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Learning to forget? Contagion and political risk in Brazil
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Miller, Marcus, Thampanishvong, Kannika and Zhang, Lei (2003) Learning to forget? Contagion and political risk in Brazil. Discussion Paper. London: Centre for Economic Policy Research (Great Britain). Discussion paper (Centre for Economic Policy Research (Great Britain)) (No.378).
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Official URL: http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=3...
Abstract
We examine whether Brazilian sovereign spreads of over 20% in 2002 could be due to contagion from Argentina or to domestic politics, or both. Treating unilateral debt restructuring as a policy variable gives rise to the possibility of self-fulfilling crisis, which can be triggered by contagion. We explore an alternative political-economy explanation of panic in financial markets inspired by Alesina (1987), which stresses exaggerated market fears of an untried Left-wing candidate. To account for the fall of sovereign spreads since the election, we employ a model of Bayesian learning and analyse the effects of contagion and IMF commitments.
| Item Type: | Working or Discussion Paper (Discussion Paper) | ||||
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| Subjects: | F History United States, Canada, Latin America > F1201 Latin America (General) H Social Sciences > HJ Public Finance |
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| Divisions: | Faculty of Social Sciences > Economics | ||||
| Library of Congress Subject Headings (LCSH): | Bayesian statistical decision theory, Debts, Public -- Brazil, Contagion (Social psychology) -- Brazil, Brazil -- Economic conditions -- 1985- | ||||
| Series Name: | Discussion paper (Centre for Economic Policy Research (Great Britain)) | ||||
| Publisher: | Centre for Economic Policy Research (Great Britain) | ||||
| Place of Publication: | London | ||||
| Official Date: | February 2003 | ||||
| Dates: |
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| Number: | No.378 | ||||
| Number of Pages: | 30 | ||||
| Institution: | University of Warwick | ||||
| Status: | Not Peer Reviewed | ||||
| Access rights to Published version: | Open Access (Creative Commons) | ||||
| Funder: | Economic and Social Research Council (Great Britain) (ESRC) | ||||
| Grant number: | R000239216 (ESRC) |
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