The Persistence of Capital Account Crises

Mauro Mecagni, Ruben Atoyan and David Hofman

No 2009/103, IMF Working Papers from International Monetary Fund

Abstract: This study contributes to the literature on capital account crises in two ways. First, our analysis of crisis episodes between 1994 and 2002 establishes a clear relationship between the persistence of crises, their complexity, and the intensity of movement of key macroeconomic variables. Second, we provide a systematic examination of the determinants of crisis duration. Our econometric analysis suggests that initial conditions and the external environment plays a key role in determining crisis persistence. The policy response also matters, but cannot offset a record of poor past policies. Overall, the results underscore the critical importance of crisis prevention efforts.

Keywords: WP; crisis; crisis duration; exchange rate; debt; capital account crises; persistence; balance sheets; crisis prevention effort; IMF financing; A. crisis persistence; crisis complexity; Capital account crisis; Real interest rates; Exchange rate arrangements; Global (search for similar items in EconPapers)
Pages: 28
Date: 2009-05-01
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Citations: View citations in EconPapers (2)

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