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The effect of currency crisis on GDP dynamics: PGLS approach

Nassim Mehin Aslani Nia (), Behzad Salmani (), Firouz Fallahi and Hossein Asgharpour ()
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Nassim Mehin Aslani Nia: Ph.D. in Economics, University of Tabriz
Behzad Salmani: Professor of Economics, University of Tabriz
Hossein Asgharpour: Professor of Economics, University of Tabriz

Quarterly Journal of Applied Theories of Economics, 2020, vol. 7, issue 1, 185-210

Abstract: It is important for economic policy makers to study and predict the sustainability of currency crisis effect on macroeconomic variables, especially GDP. In this regard, the main purpose of this paper is to examine the effect of currency crisis on GDP dynamics during 1970-2016. In this regard, the empirical model has been estimated using the theoretical basis of the research and GPS approach. According to the results, the negative effect of the currency crisis on GDP is confirmed in short run. Foreign capital inflow and short-term foreign debt are among the factors exacerbating the effect of currency crisis on GDP growth in short run. The rate of export growth and the changes in terms of trade are moderating effect of currency crisis on -GDP. Increasing the supply of national currency as well as increasing government spending and budget deficits are exacerbating effect of crisis

Keywords: Currency Crisis; GDP dynamics; PGLS (search for similar items in EconPapers)
JEL-codes: E32 F32 F41 F43 (search for similar items in EconPapers)
Date: 2020
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