MANAGING NEW-STYLE CURRENCY CRISES: THE SWAN DIAGRAM APPROACH REVISITED

Ramkishen Rajan

Macroeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: The new-style currency crises that have inflicted a number of developing and emerging economies of late are characterized by sudden stops in capital inflows and adverse balance sheet effects. Given the potential high costs of these crises, there remains an ongoing debate on how they might best be managed when they do arise. This paper argues that the age-old Swan diagram, appropriately modified, is able to provide useful insights into how a country might manage a new-style crisis via a combination of adjustment (which involves expenditure switching and reducing polices) and financing.

Keywords: Adjustment; Expenditure Reducing; Expenditure Switching; Financing; Internal balance; External balance (search for similar items in EconPapers)
JEL-codes: E42 E47 G01 (search for similar items in EconPapers)
Date: 2005-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Managing new-style currency crises: the swan diagram approach revisited (2007)
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