Currency collapses and output dynamics: a long-run perspective

Camilo Tovar ()

BIS Quarterly Review, 2010

Abstract: Currency collapses, defined as large nominal depreciations or devaluations, are associated with permanent output losses on the order of 6% of GDP on average. In this feature, we argue that the fact that these losses tend to materialise before a drop in the value of the currency indicates that it is not the large depreciation as such that is costly but the factors leading to the currency collapse. Taken on its own, the drop in the exchange rate actually has a positive effect on output.

JEL-codes: E32 F31 F41 F43 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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