Currency Crises, Capital-Account Liberalization, and Selection Bias

Reuven Glick, Xueyan Guo and Michael Hutchison
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Xueyan Guo: University of California, Santa Cruz

The Review of Economics and Statistics, 2006, vol. 88, issue 4, 698-714

Abstract: Are countries with unregulated capital flows more vulnerable to currency crises? Efforts to answer this question properly must control for self-selection bias, because countries with liberalized capital accounts may also have sounder economic policies and institutions that make them less likely to experience crises. We employ a matching and propensity-score methodology to address this issue in a panel analysis of developing countries. Our results suggest that, after controlling for sample selection bias, countries with liberalized capital accounts experience a lower likelihood of currency crises. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2006
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Working Paper: Currency crises, capital account liberalization, and selection bias (2005)
Working Paper: Currency Crises, Capital Account Liberalization, and Selection Bias (2004)
Working Paper: Currency Crises, Capital Account Liberalization, and Selection Bias (2004)
Working Paper: Currency Crises, Capital Account Liberalization, and Selection Bias (2004)
Working Paper: Currency Crises, Capital Account Liberalization, and Selection Bias (2004)
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