IMF Working Papers

Current Account Reversals and Currency Crises: Empirical Regularities

By Gian M Milesi-Ferretti, Assaf Razin

June 1, 1998

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Gian M Milesi-Ferretti, and Assaf Razin. Current Account Reversals and Currency Crises: Empirical Regularities, (USA: International Monetary Fund, 1998) accessed November 8, 2024
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

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.

Subject: Balance of payments, Currency crises, Current account, Current account balance, Current account deficits, Depreciation, Financial crises, National accounts

Keywords: Asia and Pacific, Currency crash, Currency crises, Currency crisis, Currency crisis episode, Currency depreciation, Current account, Current account balance, Current account deficit, Current account deficits, Current account reversal, Depreciation, Depreciation vis-à-vis, East Asia, Growth, Real exchange rate, Terms of trade, WP

Publication Details

  • Pages:

    44

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1998/089

  • Stock No:

    WPIEA0891998

  • ISBN:

    9781451952421

  • ISSN:

    1018-5941

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