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Currency Crises in Developed and Emerging Market Economies: A Comparative Empirical Treatment
Author:
Mr. Thomson Fontaine
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Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 013
Language:
English
Publication Date:
01 Jan 2005
DOI:
https://doi.org/10.5089/9781451860320.001
ISBN:
9781451860320
ISSN:
1018-5941
Pages:
35
Keywords:
WP; exchange rate; currency crisis; budget deficit
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper takes a step in empirically testing the implications of a number of theoretical models that attempt to highlight the dynamics behind currency crises. By focusing on countries with broadly disparate economic and political arrangements, the study attempts to determine the extent to which these variables matter in affecting the probabilities of currency crises occurring. The empirical findings provide support for the view that, in general, a deterioration in economic fundamentals and the pursuit of lax monetary policy can contribute to currency crises. The experiences of several emerging market economies suggests that the sustainability of exchange rate policy depends both on adequate policy responses to the shocks to the economy and on the fragility of the economic, financial, and political system.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund