Currency Crises and Output Dynamics

Arabinda Basistha () and Sheida Teimouri

Open Economies Review, 2015, vol. 26, issue 1, 139-153

Abstract: Output effects of currency crises are often estimated to be negative and persistent. A new banking crisis database allows us to construct pure currency collapses that are not associated with banking crises. The estimates show that countries facing a pure currency crisis have full recovery of output in the long-run while twin crisis leads to larger output losses. Allowing for long lags is a critical element in understanding the recovery dynamics. Further analysis reveals that there is a similar lag in the association between export growth and recovery dynamics. Copyright Springer Science+Business Media New York 2015

Keywords: Devaluation; Currency crisis; Banking crisis; Exchange rate; Recovery; E32; F32; F41; F43 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11079-014-9323-y

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