[PDF] Political Contagion In Currency Crises eBook

Author : Allan Drazen
Publisher :
Page : 48 pages
File Size : 35,79 MB
Release : 1999
Category : Contagion (Social psychology)
ISBN :

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Existing models of contagious currency crises are summarized and surveyed, and it is argued that more weight should be put on political factors. Towards this end, the concept of political contagion introduced, whereby contagion in speculative attacks across currencies arises solely because of political objectives of countries. A specific model of membership' contagion is presented. The desire to be part of a political-economic union, where maintaining a fixed exchange rate is a condition for membership and where the value of membership depends positively on who else is a member, is shown to give rise to potential contagion. We then present evidence suggesting that political contagion may have been important in the 1992-3 EMS crisis.

Author : Ms.Nada Choueiri
Publisher : International Monetary Fund
Page : 27 pages
File Size : 34,65 MB
Release : 1999-03-01
Category : Business & Economics
ISBN : 1451844786

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This paper proposes a model of contagious currency crises: crises transmit across countries by raising the risk premium on government bonds. Three types of equilibria can occur: a “no-collapse” equilibrium (crises never transmit from abroad); a “collapse” equilibrium (crises are inevitably contagious); or a “fundamentals” equilibrium (crises are contagious if domestic fundamentals are weak). A calibration exercise finds that the 1995 turmoil in Argentina coexisted with a combination of risk-averse investors and weak credibility in the currency board arrangement. This turmoil could only be attributed to a Tequila effect from the Mexican crisis alone if investors were excessively risk-averse.

Author : Marek Dabrowski
Publisher : Springer Science & Business Media
Page : 309 pages
File Size : 48,18 MB
Release : 2012-12-06
Category : Business & Economics
ISBN : 1461503434

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Currency Crises in Emerging Markets, prepared by Warsaw-based Center for Social and Economic Research (CASE), discusses various aspects of currency crises in emerging-market economies: The definitions and theoretical models of currency crises, the causes, management and propagation (contagion effect) of crises, their economic, social and policy consequences, the role of international financial institutions, and crisis prevention. In addition, five case studies of currency crises in Central and Eastern Europe are presented.

Author : Roberto Chang
Publisher : World Bank Publications
Page : 40 pages
File Size : 25,1 MB
Release : 2000
Category : Bankruptcy and Resolution of Financial Distress
ISBN :

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What can the international community do to prevent financial contagion?

Author : Paul Krugman
Publisher : University of Chicago Press
Page : 367 pages
File Size : 17,81 MB
Release : 2007-12-01
Category : Business & Economics
ISBN : 0226454649

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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.

Author : Kenshi Taketa
Publisher :
Page : 42 pages
File Size : 13,50 MB
Release : 2004
Category : Currency crises
ISBN :

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This paper shows that a currency crisis can spread from one country to another even when these countries are unrelated in terms of economic fundamentals. The propagation mechanism lies in each speculator's private information about his/her own type and learning behavior about other speculators' types. Since the payoff of each speculator depends on the behavior of other speculators as determined bytheir types, each speculator's behavior depends on his/her belief about other speculators' types. If a crisis in one country reveals the speculator types, it leads to a revision of each speculator's beliefs about other speculators' types and therefore a change in his/her optimal behavior, which in turn can cause a crisis even in another unrelated country. This paper also shows that the better the economic fundamentals in the country where the crisis originates, the more contagious the original crisis can be.

Author : Mark Kruger
Publisher :
Page : 28 pages
File Size : 43,12 MB
Release : 1998
Category : Africa
ISBN : 9780662270195

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This paper examines the determinants of currency crises in Latin America, Asia, and Africa. It asks two basic questions: are currency crises linked to economic fundamentals, and is there evidence of a contagion effect after controlling for the potential effects of economic fundamentals. The examination uses pooled annual data for 19 developing countries spanning the period 1977-93. Economic variables considered include the growth rate of domestic credit, real exchange rate misalignment, the relation of the M2 monetary aggregate to international reserves, and fiscal or current account deficits.

Author : B. Rother
Publisher : Springer
Page : 198 pages
File Size : 26,71 MB
Release : 2009-04-17
Category : Political Science
ISBN : 0230233643

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This book explores the role of political factors in the occurrence of currency crises, using an eclectic approach that blends case studies, a rigorous theoretical discussion, and econometric analysis.