CURRENCY MISMATCHES IN EMERGING MARKET ECONOMIES: IS WINTER COMING?

Hari Venkatesh () and Gourishankar S Hiremath ()
Additional contact information
Hari Venkatesh: Indian Institute of Technology Kharagpur
Gourishankar S Hiremath: Indian Institute of Technology Kharagpur

Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue 1, 25-54

Abstract: We develop a currency mismatch index and examine the causes of currency mismatches in emerging market economies. This study is based on a unique dataset on 22 economies from 2008 to 2017. We also construct the original sin index using granular data on international debt securities. We find Latin American countries, followed by Central European countries, suffer from the original sin and currency mismatch problems. The panel regression estimates show that country size, trade openness, and the level of economic and financial development explain cross-country variations in currency mismatches. Our empirical results suggest that unstable monetary and fiscal policies are the primary causes of currency mismatches. The results indicate that a better institutional environment reduces currency mismatches. These findings call for monetary independence, and macroprudential policy measures to minimize currency mismatches.

Keywords: Foreign Currency Debt; Currency Mismatch; Macroprudential Policies; Monetary Independence (search for similar items in EconPapers)
JEL-codes: E44 F30 F34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://bulletin.bmeb-bi.org/cgi/viewcontent.cgi?article=1061&context=bmeb (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:1b:p:25-54

DOI: 10.21098/bemp.v23i1.1182

Access Statistics for this article

Bulletin of Monetary Economics and Banking is currently edited by Paresh Narayan

More articles in Bulletin of Monetary Economics and Banking from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().