Časopis LIMESplus

Financial Instability And Economic Development In Emerging Markets

Cena u maloprodaji: 660 RSD

Cena: 540 RSD

Controversies And Critical Issues

Seemingly suddenly, in August 2007 the US financial markets came to a sudden stop. Although the first signs of accumulated difficulties became visible in 2006 when house prices peaked, in March 2007 when debtors in the subprime mortgage market started to declare bankruptcy, and in July 2007 when big banks found that they could not sell originated loans, the credit crunch finally arrived in August 2007. The monetary authorities and mainstream economists were stunned. The crisis erupted in the subprime mortgage market and afterwards, as quick as lightning, it spread to other US financial markets and markets worldwide. The real economy and export demand collapsed around the globe. Due to the collapse of export demand in developed countries, developing countries faced severe export volume contraction and decline in the terms of trade, especially in the case of commodity exporting countries. Also, investments slumped due to the cessation of previously abundant capital infl ows used to fi nance investment booms. The heightened risk aversion of investors gave rise to an excessive increase in risk premia, which spilled over into steep increases in interest rates charged on loans extended to developing countries’ business entities. The world economy entered an era of Great Recession.