On the Causes of the Latin American and Asian Currency Crises of the 1990s

Marcel Fratzscher

Chapter 4 in Latin American Economic Crises, 2004, pp 58-80 from Palgrave Macmillan

Abstract: Abstract Asia’s 1997 severe financial crisis surprised many policy-makers, economists and investors; as did the Latin American crisis in December 1994. These crises shocked not only by their severity, with large currency devaluations, widespread financial-sector failures and sharp output contractions, but also by their contagious character — spreading among regional economies. One controversial issue remains as to the factors responsible for this spread of currency crises. Could the weakness of economic fundamentals in affected countries explain their transmission, or was it the acts of speculators, and of panic and herding behaviour by investors fearful of financial loss fleeing regional markets? This chapter attempts to shed light on this question by comparing the spread of the Thai crisis in 1997 and the Mexican crisis in 1994–95.

Keywords: Current Account; Real Exchange Rate; Currency Crisis; Domestic Currency; Speculative Attack (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-4039-4385-9_4

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DOI: 10.1057/9781403943859_4

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