Current Account Reversals and Currency Crises: Empirical Regularities
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
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.
Series:
Working Paper No. 1998/089
Subject:
Balance of payments Currency crises Current account Current account balance Current account deficits Depreciation Financial crises National accounts
English
Publication Date:
June 1, 1998
ISBN/ISSN:
9781451952421/1018-5941
Stock No:
WPIEA0891998
Pages:
44
Please address any questions about this title to publications@imf.org