## Current Account Reversals and Currency Crises: Empirical Regularities

_IMF Working Papers, June 1, 1998_

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## Bibliographic details
- Authors: Gian M Milesi-Ferretti, Assaf Razin
- Published: June 1, 1998
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451952421.001

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### Overview
- Authors: Gian M Milesi-Ferretti, Assaf Razin
- Publication date: June 1, 1998
- Type: IMF Working Paper (Working Paper No. 1998/089)
- Scope: Studies large reductions in current account deficits and exchange rate depreciations in low- and middle-income countries, examining predictors of reversals and currency crises and their effects on macroeconomic performance.

### Key findings
- Both domestic and external factors are found to trigger reversals and currency crises.
  - Domestic factor explicitly identified: low reserves.
  - External factor explicitly identified: unfavorable terms of trade.
- The two types of events are distinct in their macroeconomic outcomes:
  - An exchange rate crash is associated with a fall in output growth and a recovery thereafter.
  - For current account reversals there is no systematic evidence of a growth slowdown.

### Predictive factors examined
- Domestic factors:
  - Low reserves
- External factors:
  - Unfavorable terms of trade

### Macroeconomic effects and dynamics
- Exchange rate crash:
  - Associated sequence: fall in output growth followed by a recovery.
- Current account reversal:
  - No systematic evidence of a growth slowdown associated with the reversal.

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/current-account-reversals-and-currency-crises-empirical-regularities-2647_