Equity market and foreign capital

Author: Furukawa, Yoko

Source: Canadian Journal of Economics, Volume 42, Number 1, February / fevrier 2009 , pp. 349-358(10)

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Abstract:

Abstract.

I present a model that demonstrates that the market mechanism is not always effective in stabilizing an open equity market. Foreign capital inflows create multiple equilibria in the equity market, which may simultaneously trigger a currency crisis as well as an equity market crash even if the equity market is well developed.

Keywords: F3; E5

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1540-5982.2008.01511.x

Affiliations: 1: Department of Economics, Kanagawa University

Publication date: 2009-02-01