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Currency crisis transmission through international trade

Jamal Haidar ()

Economic Modelling, 2012, vol. 29, issue 2, 151-157

Abstract: The Eurozone recent crisis has shown how balance of payments problems in less developed European Monetary Union (EMU) member countries can affect EMU trading partners, spreading the crisis to a larger group of countries. This paper introduces a three-country dynamic general equilibrium model to analyze whether and how terms of trade effects can generate a spillover effect or a currency crisis transmission between countries. Specifically, using a two period model, it incorporates world market clearing conditions for tradables into a new theoretic model, analyzes net capital flow movements between countries, and establishes cross-border macroeconomic linkages. This paper shows how a currency crisis can transmit through the real (trade) sector channel of the economy.

Keywords: International trade; General equilibrium model; Currency crisis; Contagion; Capital flows; Exchange rate movement (search for similar items in EconPapers)
JEL-codes: E1 E5 F1 F3 F4 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:2:p:151-157

DOI: 10.1016/j.econmod.2011.09.001

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