01921cas a2200253 a 4500 AALejournalIMF000956 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451851144 1018-5941 BD-DhAAL BD-DhAAL Mulder, Christian. External Vulnerability in Emerging Market Economies : How High Liquidity Can Offset Weak Fundamentals and the Effects of Contagion / Christian Mulder, Matthieu Bussiere. Washington, D.C. : International Monetary Fund, 1999. 1 online resource (41 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 investigates the factors behind the 1994 and 1997 crises and whether these can explain the 1998 crisis. The study reveals that: (i) variables used in an Early Warning System model developed by IMF staff scored well in predicting the 1998 crisis out-of-sample; (ii) all three crisis episodes can be well explained by a parsimonious set of core fundamentals and liquidity related variables; and (iii) the presence of an IMF-supported program significantly reduced the depth of crises. The results suggest that as a rule of thumb countries should hold reserves to the tune of short-term debt to avoid contagion-related crises, provided their current deficits are modest and their real effective exchange rates are not significantly misaligned. Mode of access: Internet Bussiere, Matthieu. IMF Working Papers; Working Paper ; No. 1999/088 Full text available on IMF http://elibrary.imf.org/view/journals/001/1999/088/001.1999.issue-088-en.xml IMF e-Library