01815cas a2200253 a 4500 AALejournalIMF000468 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451935967 1018-5941 BD-DhAAL BD-DhAAL Aizenman, Joshua. Contagion and Volatility with Imperfect Credit Markets / Joshua Aizenman, Pierre-Richard Agenor. Washington, D.C. : International Monetary Fund, 1997. 1 online resource (33 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper interprets contagion effects as an increase in the volatility of aggregate shocks impinging on the domestic economy. The implications of this approach are analyzed in a model with two types of credit market imperfections: domestic banks borrow at a premium on world capital markets, and domestic producers (whose demand for credit results from working capital needs) borrow at a premium from domestic banks. Higher volatility of producers' productivity shocks increases both domestic and foreign financial spreads and the producers' cost of capital, resulting in lower employment and higher incidence of default. Welfare effects are nonlinearly related to the degree of international financial integration. Mode of access: Internet Agenor, Pierre-Richard. IMF Working Papers; Working Paper ; No. 1997/127 Full text available on IMF http://elibrary.imf.org/view/journals/001/1997/127/001.1997.issue-127-en.xml IMF e-Library