VULNERABILIDADES EXTERNAS E INTERNAS DAS ECONOMIAS EMERGENTES E PADRÃO DE CONTAGIO. A EXPERIÊNCIA DA DÉCADA DE 1990

Abstract

The fast globalization process of the world's economy during the 90's, increased the markets sensitivity to stabilization and structural unbalance of emerging economies, causing recurrent severe foreign exchange crises. The upholders of the economic fundamentals thesis argue that when crises appears in an important developing country, investors reappraise economic fundamentals of other countries, causing a run on creditors at the same time speculators attack the currency to obtain profits, triggering a run that intensifies the crises. On the other hand, the upholders of pure contagious crises believe that contagions result from speculative panic or herd behavior of investors. The hypothesis tested here is that countries most vulnerable to contagion crises are those whose current account deficits are followed by strong overvaluation of the currency, whose banking system is fragile and whose international reserves are minimum in relation to external short run debt. The econometric results using all observations of the Mexican, Asian and Russian crises do not reject the hypothesis that weak fundamentals and low international reserves cause economies to be vulnerable to contagion crises, but a single contagion pattern was not confirmed in separate analysis of the Mexican, Asian and Russian crises. However, the results are consistent with crises appraisals performed by notorious economists. The shortcoming for developing this empirical line of research is the unavailability of a general model able to explain all crises. The policy implication of this work is that vulnerable countries should look for contingency credit lines from international multilateral credit agencies in order to face potential financial panic, while measures are taken to correct external and internal vulnerabilities and the extreme mobility of short-term capitals.