Mishmash on Mismatch? Balance-Sheet Effects and Emerging-Markets Crises. http://home.uchicago.edu\~bleakley

We critically assess the recent empirical literature on the importance of dollar debt and balance-sheet effects in the emerging-market financial crises of the 1990s. Using a simple model, we discuss which specifications are theoretically appropriate, and provide additional insights as to the proper interpretation of the reduced-form evidence in the literature. We show that the variety of results found in the existing literature are related to the heterogeneity of regression specifications. Using harmonized microdata on corporates across a dozen countries in Latin America and Asia, and we replicate common specifications for the effect of dollar debt on investment and output at the firm level. In this light, we suggest that the literature on corporate-level currency mismatch is hardly a mishmash, but in fact quite concordant