WorldCat Identities

Corsetti, Giancarlo

Works: 126 works in 673 publications in 1 language and 3,814 library holdings
Roles: Editor, Organizer of meeting, Honoree
Classifications: HG3942, 332.4566094
Publication Timeline
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Most widely held works by Giancarlo Corsetti
Interpreting the ERM crisis : country-specific and systemic issues by Willem H Buiter ( Book )
24 editions published between 1996 and 1998 in English and held by 463 WorldCat member libraries worldwide
Financial markets and European monetary cooperation : the lessons of the 1992-93 exchange rate mechanism crisis by Willem H Buiter ( Book )
18 editions published between 1997 and 2001 in English and held by 368 WorldCat member libraries worldwide
The authors first sketch the history of monetary cooperation in Europe from Bretton Woods to Maastricht. A step-by-step account of the 1992-93 events follows, including a discussion of the extent to which financial markets anticipated the crisis. A survey of the recent literature on the subject introduces the authors' center-periphery model of currency crisis. The authors argue that the vulnerability of Europe to financial crisis was - and still is - the result of the lack of concern with the systemic dimensions of monetary policy-making, both in terms of the international spillovers of domestic policies and the strategic interaction among monetary authorities
Fiscal stimulus with spending reversals by Giancarlo Corsetti ( )
16 editions published in 2009 in English and held by 207 WorldCat member libraries worldwide
The impact of fiscal stimulus depends not only on short-term tax and spending policies, but also on expectations about offsetting measures in the future. This paper analyzes the effects of an increase in government spending under a plausible debt-stabilizing policy that links current stimulus to a subsequent period of spending restraint. Accounting for such spending reversals brings an otherwise standard new Keynesian model in line with the stylized facts of fiscal transmission, including the crowding-in of consumption and the 'puzzle' of real exchange rate depreciation. Time series evidence f
What determines government spending multipliers? by Giancarlo Corsetti ( )
11 editions published in 2012 in English and held by 197 WorldCat member libraries worldwide
This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis
Paper tigers? : a model of the Asian crisis by Giancarlo Corsetti ( Book )
11 editions published in 1998 in English and held by 101 WorldCat member libraries worldwide
This paper develops an interpretation of the Asian meltdown focused on moral hazard as the common source of overinvestment, excessive external borrowing, and current account deficits. To the extent that foreign creditors are willing to lend to domestic agents against future bail-out revenue from the government, unprofitable projects and cash shortfalls are re-financed through external borrowing. While public deficits need not be high before a crisis, the eventual refusal of foreign creditors to refinance the country's cumulative losses forces the government to step in and guarantee the outstanding stock of external liabilities. To satisfy solvency, the government must then undertake appropriate domestic fiscal reforms, possibly involving recourse to seigniorage revenues. Expectations of inflationary financing thus cause a collapse of the currency and anticipate the event of a financial crisis. The empirical section of the paper presents evidence in support of the thesis that weak cyclical performances, low foreign exchange reserves, and financial deficiencies resulting into high shares of non-performing loans were at the core of the Asian collapse
Optimal government spending and taxation in endogenous growth models by Giancarlo Corsetti ( Book )
13 editions published in 1996 in English and held by 100 WorldCat member libraries worldwide
This paper analyzes optimal spending, tax and financial policies in models of endogenous growth where public spending is productive. We extend previous work in four directions. First, we analyze optimal policies when the government is allowed to borrow and lend, rather than being restricted to run a balanced budget in every period. Second, we develop a model with a separate human capital accumulation sector. Therefore, the properties of optimal policies depend on whether government spending affects the productivity of the final goods sector or the human capital accumulation sector. Third, we consider the policy implications of alternative assumptions about which factor of production benefits from the external effects of productive public goods. Fourth, we study the implications of restrictions on the menu of tax instruments available to the policy maker. We contrast optimal tax rates on human and physical capital under different assumptions on technology and distribution. We analyze the welfare properties of public debt and assets
International dimensions of optimal monetary policy by Giancarlo Corsetti ( Book )
17 editions published between 2001 and 2002 in English and held by 99 WorldCat member libraries worldwide
"This paper provides a baseline general-equilibrium model of optimal monetary policy among interdependent economies with monopolistic firms that set prices one period in advance. Strict adherence to inward-looking policy objectives such as the stabilization of domestic output cannot be optimal when firms' markups are exposed to currency fluctuations. Such policies induce excessive volatility in exchange rates and foreign sales revenue, leading exporters to set higher prices in response to higher profit risk. In general, optimal rules trade off a larger domestic output gap against lower import prices. Monetary rules in a world Nash equilibrium lead to less exchange rate volatility relative to both inward-looking rules and discretionary policies, even when the latter do not suffer from any inflationary (or deflationary) bias. Gains from international monetary cooperation are related in an nonmonotonic way to the degree of exchange rate pass-through"--Federal Reserve Bank of New York web site
Self-validating optimum currency areas by Giancarlo Corsetti ( Book )
16 editions published in 2002 in English and held by 98 WorldCat member libraries worldwide
In this paper we show that a currency area can be a self-validating optimal policy regime, even when monetary unification does not foster real economic integration and intra-industry trade. This is because profit-maximizing producers in a currency area adopt endogenous pricing strategies that make exchange rate fluctuations highly costly in welfare terms. In our model exporters choose the degree of exchange rate pass-through onto export prices given monetary policy rules, and monetary authorities choose optimal policy rules taking firms' pass-through as given. We show that there exist two equilibria, which define two self-validating currency regimes. In the first, firms preset prices in domestic currency only, and let foreign-currency prices to be determined by the law of one price. Optimal policy rules then target the domestic output gap and floating exchange rates support the flex-price allocation. In the second equilibrium firms optimally preset prices in local currency, and a monetary union is the optimal policy choice for all countries. Although business cycles are more synchronized with a common currency, flexible exchange rates are superior in terms of welfare
A center-periphery model of monetary coordination and exchange rate crises by Willem H Buiter ( Book )
13 editions published in 1995 in English and held by 95 WorldCat member libraries worldwide
The paper analyzes the modalities and consequences of a breakdown of cooperation between the monetary authorities of inflation-prone Periphery Countries that use an exchange rate peg as an anti- inflationary device, when the Center is hit by an aggregate demand shock. Cooperation in the Periphery is constrained to be symmetric: costs and benefits must be equal for all. Our model suggests that there are at least two ways in which a generalized crisis of the exchange rate system may emerge. The first is when the constrained cooperative response of the Periphery is a moderate common devaluation while the non-cooperative equilibrium has large devaluations by a few countries. An exchange rate crisis emerges if Periphery countries give in to their individual incentives to renege on the cooperative agreement. In the second case, the Center shock is not large enough to trigger a general devaluation in the constrained cooperative equilibrium; yet some of the Periphery countries would devalue in the Nash equilibrium, making the monetary stance in the system more expansionary. In this case, reversion to Nash is collectively rational. We offer this model as a useful parable for interpreting the collapse of the EMR in 1992-93
What caused the Asian currency and financial crisis? by Giancarlo Corsetti ( Book )
16 editions published in 1998 in English and held by 86 WorldCat member libraries worldwide
The paper explores the view that the Asian currency and financial crises in 1997 and 1998 reflected structural and policy distortions in the countries of the region, even if market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to be more severe than warranted by the initial weak economic conditions. The second part of the paper presents a reconstruction of the Asian meltdown -- from the antecedents in 1995-96 to the recent developments in the summer of 1998 -- in parallel with a survey of the debate on the strategies to recover from the crisis, the role of international intervention, and the costs and benefits of capital controls
The simple geometry of transmission and stabilization in closed and open economies by Giancarlo Corsetti ( )
16 editions published in 2005 in English and held by 86 WorldCat member libraries worldwide
"This paper provides an introduction to the recent literature on macroeconomic stabilization in closed and open economies. We present a stylized theoretical framework, and illustrate its main properties with the help of an intuitive graphical apparatus. Among the issues we discuss: optimal monetary policy and the welfare gains from macroeconomic stabilization; international transmission of real and monetary shocks and the role of exchange rate pass-through; the design of optimal exchange rate regimes and monetary coordination among interdependent economies"--NBER website
Competitive devaluations : a welfare-based approach by Giancarlo Corsetti ( Book )
12 editions published in 1999 in English and held by 86 WorldCat member libraries worldwide
This paper studies the mechanism of international transmission of exchange rate shocks within a 3-country Center-Periphery model, providing a choice-theoretic framework for the policy analysis and empirical assessment of competitive devaluations. If relative prices and terms of trade exhibit some flexibility conforming to the law of one price, a devaluation by one country is beggar-thy-neighbor relative to another country through its effects on cost-competitiveness in a third market. Yet, due to direct bilateral trade among the two countries, there is a large range of parameter values for which a country is better off by maintaining a peg in response to its partner's devaluation. If instead deviations from the law of one price are to be considered the dominant empirical paradigm, then the beggar-thy-neighbor effect based on competition in a third market may disappear. However, a country's devaluation has a negative welfare impact on the economies of its trading partners based on the deterioration of their export revenues and profits and the increase in disutility from higher labor effort for any level of consumption
Welfare and macroeconomic interdependence by Giancarlo Corsetti ( Book )
9 editions published in 1997 in English and held by 86 WorldCat member libraries worldwide
The paper develops a simple choice-theoretic model suitable for carrying out welfare" analyses of the international transmission of monetary and fiscal policies. The model can be" solved in closed form and illustrated in terms of the simplest graphical apparatus provide the analysis of macroeconomic interdependence, structural spillovers strategic complementarities with rigorous but intuitive micro-foundations. In contrast with the" traditional literature, our findings emphasize the positive externalities of foreign monetary" expansions and foreign fiscal contractions on domestic welfare, while highlighting the" ambiguous welfare effects of domestic policy shocks
What caused the Asian currency and financial crisis? by Giancarlo Corsetti ( Book )
16 editions published in 1998 in English and held by 85 WorldCat member libraries worldwide
The paper explores the view that the Asian currency and financial crises in 1997 and 1998 reflected structural and policy distortions in the countries of the region, even if market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to be more severe than warranted by the initial weak economic conditions. The first part of the paper provides an overview of economic fundamentals in Asia on the eve of the crisis, with emphasis on current account imbalances, quantity and quality of financial overlending, ' banking problems, and composition, maturity and size of capital inflows
International lending of last resort and moral hazard : a model of the IMF's catalytic finance by Giancarlo Corsetti ( Book )
14 editions published between 2003 and 2004 in English and held by 83 WorldCat member libraries worldwide
"It is often argued that the provision of liquidity by the international institutions such as the IMF to countries experiencing balance of payment problems can have catalytic effects on the behavior of international financial markets, i.e., it can reduce the scale of liquidity runs by inducing investors to roll over their financial claims to the country. Critics point out that official lending also causes moral hazard distortions: expecting to be bailed out by the IMF, debtor countries have weak incentives to implement good but costly policies, thus raising the probability of a crisis. This paper presents an analytical framework to study the trade-off between official liquidity provision and debtor moral hazard. In our model international financial crises are caused by the interaction of bad fundamentals, self-fulfilling runs and policies by three classes of optimizing agents: international investors, the local government and the IMF. We show how an international financial institution helps prevent liquidity runs via coordination of agents' expectations, by raising the number of investors willing to lend to the country for any given level of the fundamental. We show that the influence of such an institution is increasing in the size of its interventions and the precision of its information: more liquidity support and better information make agents more willing to roll over their debt and reduces the probability of a crisis. Different from the conventional view stressing debtor moral hazard, we show that official lending may actually strengthen a government incentive to implement desirable but costly policies. By worsening the expected return on these policies, destructive liquidity runs may well discourage governments from undertaking them, unless they can count on contingent liquidity assistance"--NBER website
Macroeconomics of international price discrimination by Giancarlo Corsetti ( Book )
21 editions published between 2002 and 2003 in English and held by 82 WorldCat member libraries worldwide
"This paper builds a baseline two-country model of real and monetary transmission under optimal international price discrimination. Distributing traded goods to consumers requires nontradables; because of distributive trade, the price elasticity of export demand depends on the exchange rate. Profit-maximizing monopolistic firms drive a wedge between wholesale and retail prices across countries. This entails possibly large deviations from the law of one price and incomplete pass-through on import prices. Yet, consistent with expenditure-switching effects, a nominal depreciation generally worsens the terms of trade. Moreover, the exchange rate and the terms of trade can be more volatile than fundamentals. For plausible ranges of the distribution margin, there can be multiple steady states, whereas large differences in nominal and real exchange rates across equilibria translate into small differences in consumption, employment and the price level. Finally, we show that with competitive goods markets international policy cooperation is redundant even under financial autarky"--Federal Reserve Board web site
Productivity spillovers, terms of trade and the "home market effect" by Giancarlo Corsetti ( )
14 editions published in 2005 in English and held by 79 WorldCat member libraries worldwide
"This paper analyzes the welfare implications of international spillovers related to productivity gains, changes in market size, or government spending. We introduce trade costs and endogenous varieties in a two-country general-equilibrium model with monopolistic competition, drawing a distinction between productivity gains that enhance manufacturing efficiency, and gains that lower the cost of firms' entry and product differentiation. Our model suggests that countries with lower manufacturing costs have higher GDP but supply a smaller number of goods at a lower international price. Countries with lower entry and differentiation costs also have higher GDP, but supply a larger array of goods at improved terms of trade. The sign of the international welfare spillovers depends on terms of trade, but also on consumers' taste for variety. Higher domestic demand has macroeconomic implications that are similar to those of a reduction in firms' entry costs"--NBER website
Towards a theory of firm entry and stabilization policy by Paul R Bergin ( )
14 editions published between 2005 and 2006 in English and held by 77 WorldCat member libraries worldwide
"This paper studies the role of stabilization policy in a model where firm entry responds to shocks and uncertainty. We evaluate stabilization policy in the context of a simple analytically solvable sticky price model, where firms have to prepay a fixed cost of entry. The presence of endogenous entry can alter the dynamic response to shocks, leading to greater persistence in the effects of monetary and real shocks. Entry affects welfare, depending on the love of variety in consumption and investment, as well as its implications for market competitiveness. In this context, monetary policy has an additional role in regulating the optimal number of entrants, as well as the optimal level of production at each firm. We find that the same monetary policy rule optimal for regulating the scale of production in familiar sticky price models without entry, also generates the amount of (endogenous) entry corresponding to a flex-price equilibrium"--National Bureau of Economic Research web site
The role of large players in currency crises by Giancarlo Corsetti ( Book )
9 editions published in 2001 in English and held by 75 WorldCat member libraries worldwide
During recent episodes of financial turmoil some policy makers voiced concerns about aggressive, and possibly manipulative, practices by highly leveraged institutions in emerging markets. This paper addresses these concerns by reconsidering in detail, at both theoretical and empirical levels, the role of large players in currency crises. The first part of the study discusses analytical results from different models of speculative attack, suggesting that the presence of agents with market power can increase a country's vulnerability to a crisis and make other investors more aggressive in their position-taking. Both size and reputation for quality of information matter in determining large players' impact on the market. The second part of the study presents evidence on the correlation between exchange rate movements and major market participants' net currency positions, and delves into a comparative analysis of several recent crisis episodes in Thailand, Hong Kong, Malaysia, Australia, and South Africa in light of the previous theoretical results
Pension reform and growth by Giancarlo Corsetti ( Book )
9 editions published between 1995 and 1999 in English and Undetermined and held by 65 WorldCat member libraries worldwide
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Alternative Names
Corsetti, G.
Corsetti, G. 1960-
Corsetti, G. (Giancarlo)
Corsetti, Giancarlo M.
Corsetti, Giancarlo M. 1960-
English (288)