Global Financial Crisis: Did Exchange Rate Politics Help Emerging Countries To Be More Resilient

Feryel Ouerghi
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Feryel Ouerghi: UR EMF (University of Tunis El Manar) & ESSECT (University of Tunis), 4 rue Abou Zakaria El Hafsi, 1089 Montfleury. Tunisia.

International Journal of Economics and Financial Issues, 2013, vol. 3, issue 4, 949 - 963

Abstract: In this paper, we try to explain how exchange politics help emerging economies to escape global financial crisis. We conduct a comparative analysis between two periods: financial crises period of the 1990's and global financial crisis of 2007-2008. We attempt to outline the determinants of a successful exchange rate regime choice. The study is based on traditional analysis of exchange rate regime choice (Optimum Currency Area theory and financial integration approach) and on political economy approach. The results show that resilience to crisis in emerging countries is improved by the choice of adequate exchange rate regime. Greater trade openness, higher economic integration, low inflation and democratic institutions which are associated with faster recovery, are the principal determinants of exchange regime during the period of 2005-2010

Keywords: Global crisis; exchange politics; currency crisis; exchange rate determinants (search for similar items in EconPapers)
JEL-codes: D72 F33 F41 (search for similar items in EconPapers)
Date: 2013
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