Current Account Reversals And Currency Crises

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Current Account Reversals and Currency Crises

Mr.Gian Milesi-Ferretti,Assaf Razin
Current Account Reversals and Currency Crises Book PDF

Author : Mr.Gian Milesi-Ferretti,Assaf Razin
Publisher : International Monetary Fund
Page : 45 pages
File Size : 42,9 Mb
Release : 1998-06-01
Category : Business & Economics
ISBN : 9781451952421

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Current Account Reversals and Currency Crises by Mr.Gian Milesi-Ferretti,Assaf Razin Pdf

This paper studies large reductions in current account deficits and exchange rate depreciations in low- and middle-income countries. It examines which factors help predict the occurrence of a reversal or a currency crisis, and how these events affect macroeconomic performance. Both domestic factors, such as the low reserves, and external factors, such as unfavorable terms of trade, are found to trigger reversals and currency crises. The two types of events are, however, distinct; an exchange rate crash is associated with a fall in output growth and a recovery thereafter, while for reversals there is no systematic evidence of a growth slowdown.

Current Account Reversals and Currency Crises

Gian Maria Milesi-Ferretti
Current Account Reversals and Currency Crises Book PDF

Author : Gian Maria Milesi-Ferretti
Publisher : Unknown
Page : 44 pages
File Size : 47,6 Mb
Release : 2006
Category : Electronic
ISBN : OCLC:1291214812

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Current Account Reversals and Currency Crises by Gian Maria Milesi-Ferretti Pdf

This paper studies large reductions in current account deficits and exchange rate depreciations in low- and middle-income countries. It examines which factors help predict the occurrence of a reversal or a currency crisis, and how these events affect macroeconomic performance. Both domestic factors, such as the low reserves, and external factors, such as unfavorable terms of trade, are found to trigger reversals and currency crises. The two types of events are, however, distinct; an exchange rate crash is associated with a fall in output growth and a recovery thereafter, while for reversals there is no systematic evidence of a growth slowdown.

Sharp Reductions in Current Account Deficits

Mr.Gian Milesi-Ferretti,Assaf Razin
Sharp Reductions in Current Account Deficits Book PDF

Author : Mr.Gian Milesi-Ferretti,Assaf Razin
Publisher : International Monetary Fund
Page : 17 pages
File Size : 44,8 Mb
Release : 1997-12-01
Category : Business & Economics
ISBN : 9781451858228

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Sharp Reductions in Current Account Deficits by Mr.Gian Milesi-Ferretti,Assaf Razin Pdf

The paper studies determinants and consequences of sharp reductions in current account imbalances (reversals) in low- and middle-income countries. It poses two questions: what triggers reversals, and what factors explain how costly reversals are? It finds that both domestic variables, such as the current account balance, openness to trade, and the level of reserves, and external variables, such as terms of trade shocks, U.S. real interest rates, and growth in industrial countries, seem to play important roles in explaining reversals in current account imbalances. It also finds some evidence that countries with a less appreciated real exchange rate, higher investment, and more openness before the reversal tend to grow faster after a reversal occurs.

Currency Crises

Paul Krugman
Currency Crises Book PDF

Author : Paul Krugman
Publisher : University of Chicago Press
Page : 367 pages
File Size : 42,5 Mb
Release : 2007-12-01
Category : Business & Economics
ISBN : 9780226454641

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Currency Crises by Paul Krugman Pdf

There is no universally accepted definition of a currency crisis, but most would agree that they all involve one key element: investors fleeing a currency en masse out of fear that it might be devalued, in turn fueling the very devaluation they anticipated. Although such crises—the Latin American debt crisis of the 1980s, the speculations on European currencies in the early 1990s, and the ensuing Mexican, South American, and Asian crises—have played a central role in world affairs and continue to occur at an alarming rate, many questions about their causes and effects remain to be answered. In this wide-ranging volume, some of the best minds in economics focus on the historical and theoretical aspects of currency crises to investigate three fundamental issues: What drives currency crises? How should government behavior be modeled? And what are the actual consequences to the real economy? Reflecting the latest thinking on the subject, this offering from the NBER will serve as a useful basis for further debate on the theory and practice of speculative attacks, as well as a valuable resource as new crises loom.

Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis?

Mr.Ilan Goldfajn,Mrs.Poonam Gupta
Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis Book PDF

Author : Mr.Ilan Goldfajn,Mrs.Poonam Gupta
Publisher : International Monetary Fund
Page : 33 pages
File Size : 43,5 Mb
Release : 1999-03-01
Category : Business & Economics
ISBN : 9781451846195

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Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis? by Mr.Ilan Goldfajn,Mrs.Poonam Gupta Pdf

This paper provides evidence on the relationship between monetary policy and the exchange rate in the aftermath of currency crises. It analyzes a large data set of currency crises in 80 countries for the period 1980-98. The main question addressed is: Can monetary policy increase the probability of reversing a postcrisis undervaluation through nominal appreciation rather than higher inflation? We find that tight monetary policy facilitates the reversal of currency undervaluation through nominal appreciation. When the economy also faces a banking crisis, the results are not robust: depending on the specification, tight monetary policies may not have the same effect.

Preventing Currency Crises in Emerging Markets

Sebastian Edwards,Jeffrey A. Frankel
Preventing Currency Crises in Emerging Markets Book PDF

Author : Sebastian Edwards,Jeffrey A. Frankel
Publisher : University of Chicago Press
Page : 783 pages
File Size : 54,5 Mb
Release : 2009-02-15
Category : Business & Economics
ISBN : 9780226185057

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Preventing Currency Crises in Emerging Markets by Sebastian Edwards,Jeffrey A. Frankel Pdf

Economists and policymakers are still trying to understand the lessons recent financial crises in Asia and other emerging market countries hold for the future of the global financial system. In this timely and important volume, distinguished academics, officials in multilateral organizations, and public and private sector economists explore the causes of and effective policy responses to international currency crises. Topics covered include exchange rate regimes, contagion (transmission of currency crises across countries), the current account of the balance of payments, the role of private sector investors and of speculators, the reaction of the official sector (including the multilaterals), capital controls, bank supervision and weaknesses, and the roles of cronyism, corruption, and large players (including hedge funds). Ably balancing detailed case studies, cross-country comparisons, and theoretical concerns, this book will make a major contribution to ongoing efforts to understand and prevent international currency crises.

Exchange Rate Management and Crisis Susceptibility

Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash Qureshi
Exchange Rate Management and Crisis Susceptibility Book PDF

Author : Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash Qureshi
Publisher : International Monetary Fund
Page : 46 pages
File Size : 41,5 Mb
Release : 2014-01-24
Category : Business & Economics
ISBN : 9781484383971

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Exchange Rate Management and Crisis Susceptibility by Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash Qureshi Pdf

This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 EMEs over 1980-2011, show that macroeconomic and financial vulnerabilities are significantly greater under less flexible intermediate regimes—including hard pegs—as compared to floats. While not especially susceptible to banking or currency crises, hard pegs are significantly more prone to growth collapses, suggesting that the security of the hard end of the prescription is largely illusory. Intermediate regimes as a class are the most susceptible to crises, but “managed floats”—a subclass within such regimes—behave much more like pure floats, with significantly lower risks and fewer crises. “Managed floating,” however, is a nebulous concept; a characterization of more crisis prone regimes suggests no simple dividing line between safe floats and risky intermediate regimes.

Assessing the Effect of Current Account and Currency Crises on Economic Growth

Christian Aßmann
Assessing the Effect of Current Account and Currency Crises on Economic Growth Book PDF

Author : Christian Aßmann
Publisher : Unknown
Page : 41 pages
File Size : 50,6 Mb
Release : 2008
Category : Electronic
ISBN : OCLC:1290308908

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Assessing the Effect of Current Account and Currency Crises on Economic Growth by Christian Aßmann Pdf

Several empirical studies are concerned with measuring the effect of currency and current account crises on economic growth. Using different empirical models this paper serves two aspects. It provides an explicit assessment of country specific factors influencing the costs of crises in terms of economic growth and controls via a treatment type model for possible sample selection governing the occurrence of crises in order to estimate the impact on economic growth correctly. The applied empirical models allow for rich intertemporal dependencies via serially correlated errors and capture latent country specific heterogeneity via random coefficients. For accurate estimation of the treatment type model a simulated maximum likelihood approach employing efficient importance sampling is used. The results reveal significant costs in terms of economic growth for both crises. Costs for reversals are linked to country specific variables, while costs for currency crises are not. Furthermore, shocks explaining current account reversals and growth show strong significant positive correlation.

Do Workers' Remittances Reduce the Probability of Current Account Reversals?

Matteo Bugamelli,Francesco Paternò
Do Workers Remittances Reduce the Probability of Current Account Reversals Book PDF

Author : Matteo Bugamelli,Francesco Paternò
Publisher : World Bank Publications
Page : 53 pages
File Size : 52,8 Mb
Release : 2005
Category : Balance of payments
ISBN : 8210379456XXX

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Do Workers' Remittances Reduce the Probability of Current Account Reversals? by Matteo Bugamelli,Francesco Paternò Pdf

The authors combine the literature on financial crises in emerging markets and developing economies with that on international migrations by investigating whether the increasingly large flows of workers' remittances can help reduce the probability of current account reversals. The rationale for this stands in the great stability and low cyclicality of remittances as compared with other private capital flows: these properties, combined with the fact that remittances are cheap inflows of foreign currencies, might reduce the probability that foreign investors suddenly flee out of emerging markets and developing economies and trigger a dramatic current account adjustment. The authors find that remittances can have such a beneficial effect. In particular, they show that a high level of remittances, as a ratio of GDP, makes the relationship between a decreasing stock of international reserves (over GDP) and a higher probability of current account crises less stringent. The same occurs, though less neatly, for the positive relationship between an increasing stock of external debt (over GDP) and the probability of current account reversals. The results point also to a threshold effect of remittances: the mechanisms just described are, in fact, much stronger when remittances are above 3 percent of GDP.

Capital Controls and Capital Flows in Emerging Economies

Sebastian Edwards
Capital Controls and Capital Flows in Emerging Economies Book PDF

Author : Sebastian Edwards
Publisher : University of Chicago Press
Page : 699 pages
File Size : 44,7 Mb
Release : 2009-02-15
Category : Business & Economics
ISBN : 9780226184999

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Capital Controls and Capital Flows in Emerging Economies by Sebastian Edwards Pdf

Some scholars argue that the free movement of capital across borders enhances welfare; others claim it represents a clear peril, especially for emerging nations. In Capital Controls and Capital Flows in Emerging Economies, an esteemed group of contributors examines both the advantages and the pitfalls of restricting capital mobility in these emerging nations. In the aftermath of the East Asian currency crises of 1997, the authors consider mechanisms that eight countries have used to control capital inflows and evaluate their effectiveness in altering the maturity of the resulting external debt and reducing macroeconomic vulnerability. This volume is essential reading for all those interested in emerging nations and the costs and benefits of restricting international capital flows.

Financial Crises Explanations, Types, and Implications

Mr.Stijn Claessens,Mr.Ayhan Kose
Financial Crises Explanations Types and Implications Book PDF

Author : Mr.Stijn Claessens,Mr.Ayhan Kose
Publisher : International Monetary Fund
Page : 66 pages
File Size : 51,5 Mb
Release : 2013-01-30
Category : Business & Economics
ISBN : 9781475561005

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Financial Crises Explanations, Types, and Implications by Mr.Stijn Claessens,Mr.Ayhan Kose Pdf

This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

G7 Current Account Imbalances

Richard H. Clarida
G7 Current Account Imbalances Book PDF

Author : Richard H. Clarida
Publisher : University of Chicago Press
Page : 519 pages
File Size : 41,6 Mb
Release : 2007-11-01
Category : Business & Economics
ISBN : 9780226107288

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G7 Current Account Imbalances by Richard H. Clarida Pdf

The current account deficit of the United States is more than six percent of its gross domestic product—an all-time high. And the rest of the world, including other G7 countries such as Japan and Germany, must collectively run current account surpluses to finance this deficit. How long can such unevenness between imports and exports be sustained, and what form might their eventual reconciliation take? Putting forth scenarios ranging from a gradual correction to a crash landing for the dollar, G7 Current Account Imbalances brings together economists from around the globe to consider the origins, status, and future of those disparities. An esteemed group of collaborators here examines the role of the bursting of the dot-com bubble, the history of previous episodes of current account adjustments, and the possibility of the Euro surpassing the dollar as the leading international reserve currency. Though there are areas of broad agreement—that the imbalances will ultimately decline and that currency revaluations will be part of the solution—many areas of contention remain regarding both the dangers of imbalances and the possible forms of adjustment. This volume will be of tremendous value to economists, politicians, and business leaders alike as they look to the future of the G7 economies.

Do Workers' Remittances Reduce the Probability of Current Account Reversals?

Matteo Bugamelli,Francesco Patern??
Do Workers Remittances Reduce the Probability of Current Account Reversals Book PDF

Author : Matteo Bugamelli,Francesco Patern??
Publisher : Unknown
Page : 128 pages
File Size : 48,5 Mb
Release : 2012
Category : Electronic
ISBN : OCLC:931675174

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Do Workers' Remittances Reduce the Probability of Current Account Reversals? by Matteo Bugamelli,Francesco Patern?? Pdf

The authors combine the literature on financial crises in emerging markets and developing economies with that on international migrations by investigating whether the increasingly large flows of workers' remittances can help reduce the probability of current account reversals. The rationale for this stands in the great stability and low cyclicality of remittances as compared with other private capital flows: these properties, combined with the fact that remittances are cheap inflows of foreign currencies, might reduce the probability that foreign investors suddenly flee out of emerging markets and developing economies and trigger a dramatic current account adjustment. The authors find that remittances can have such a beneficial effect. In particular, they show that a high level of remittances, as a ratio of GDP, makes the relationship between a decreasing stock of international reserves (over GDP) and a higher probability of current account crises less stringent. The same occurs, though less neatly, for the positive relationship between an increasing stock of external debt (over GDP) and the probability of current account reversals. The results point also to a threshold effect of remittances: the mechanisms just described are, in fact, much stronger when remittances are above 3 percent of GDP.

Capital Flows and Financial Crises

Miles Kahler
Capital Flows and Financial Crises Book PDF

Author : Miles Kahler
Publisher : Manchester University Press
Page : 290 pages
File Size : 48,6 Mb
Release : 1998
Category : Business & Economics
ISBN : 0719056497

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Capital Flows and Financial Crises by Miles Kahler Pdf

Capital flows to the developing economies have long displayed a boom-and-bust pattern. However, rarely has the cycle turned as abruptly as it did in the 1990s, when the surges in lending were followed by the Mexican peso crisis of 1994-95, and the sudden collapse of currencies in Asia in 1997 and 1998. The volume maps an uncertain financial landscape in which volatile private capital flows and fragile banking systems produce sudden reversals of fortune for governments and economies. This environment creates dilemmas for both national policy-makers who confront the mixed blessing of capital inflows and the international institutions that manage the recurrent crises.

Sudden Stops and IMF-Supported Programs

Barry J. Eichengreen,Poonam Gupta,Ashoka Mody
Sudden Stops and IMF Supported Programs Book PDF

Author : Barry J. Eichengreen,Poonam Gupta,Ashoka Mody
Publisher : International Monetary Fund
Page : 58 pages
File Size : 46,8 Mb
Release : 2006-04
Category : Business & Economics
ISBN : UCSD:31822034373514

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Sudden Stops and IMF-Supported Programs by Barry J. Eichengreen,Poonam Gupta,Ashoka Mody Pdf

Could a high-access, quick-disbursing "insurance facility" in the IMF help to reduce the incidence of sharp interruptions in capital flows ("sudden stops")? We contribute to the debate on this question by analyzing the impact of conventional IMF-supported programs on the incidence of sudden stops. Correcting for the non-random assignment of programs, we find that sudden stops are fewer and generally less severe when an IMF arrangement exists and that this form of "insurance" works best for countries with strong fundamentals. In contrast there is no evidence that a Fund-supported program attenuates the output effects of capital account reversals if these nonetheless occur.