Are twin currency and debt crises special?

Bernhard Herz, Christian Bauer and Volker Karb

No 11, Proceedings of the German Development Economics Conference, Berlin 2006 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: We show theoretically and empirically that twin currency and debt crises should be treated as a particular crisis type. Twin currency and debt crises differ from both pure currency and pure debt crises in their determinants, the course of the crises, and their economic consequences. We find that each crises type has a unique set of macroeconomic causes. We also uncover internal contagion and selection bias effects which may lead to biased results if twin crises are not treated separately. Such a separation considerably improve the efficiency of early warning systems especially on debt and twin crises.

Date: 2006
New Economics Papers: this item is included in nep-cba, nep-fmk and nep-ifn
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Journal Article: Are twin currency and debt crises special? (2007)
Working Paper: Are twin currency and debt crises special? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:gdec06:4734

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