What Caused the 1991 Currency Crisis in India?

Author/Editor:

Sweta Chaman Saxena ; Valerie Cerra

Publication Date:

October 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Did real overvaluation contribute to the 1991 currency crisis in India? This paper seeks an answer by constructing the equilibrium real exchange rate, using an error correction model and a technique developed by Gonzalo and Granger (1995). The results are affirmative and the evidence indicates that current account deficits and investor confidence also played significant roles in the sharp exchange rate depreciation. The ECM model is supported by superior out-of-sample forecast performance versus a random walk model.

Series:

Working Paper No. 00/157

Subject:

English

Publication Date:

October 1, 2000

ISBN/ISSN:

9781451857481/1018-5941

Stock No:

WPIEA1572000

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

27

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