 How Best to Manage New-Style Currency Crises?Chapter 7 in Exchange Rates, Currency Crisis and Monetary Cooperation in Asia, 2009, pp 151-179 from Palgrave Macmillan Abstract: Abstract The intensity and suddenness of recent currency crises has inspired a “third generation” crisis literature that focuses on: (a) sharp increases in the domestic value of foreign currency debt (so-called “balance sheet effects”) which adversely affect a country’s solvency position and (b) “sudden stops” in capital inflows (including outright reversals) which negatively influence a country’s liquidity position.2 As Dornbusch (2001) notes: A new-style crisis involves doubt about creditworthiness of the balance sheet of a significant part of the economy … and the exchange rate … (W)hen there is a question about one, the implied capital flight makes it immediately a question about both … (The) central part of the new-style crisis is the focus on balance sheets and capital flight … (T)hey involve a far more dramatic impact on economic activity than mere current account disturbances … both in terms of magnitude of the financial shock as well as disorganization effects stemming from illiquidity or bankruptcy. Keywords: Exchange Rate; Interest Rate; Monetary Policy; International Monetary Fund; Fiscal Policy (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-23419-2_7 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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