What Causes Currency Crises: Sunspots, Contagion or Fundamentals?

Marcel Fratzscher

Economics Working Papers from European University Institute

Abstract: This paper is an attempt to explain currency crises and exchange rate movements in open emerging markets during the 1990s. A model is developed that allows a systematic comparison and evaluation of three competing explanations for crises: weak economic fundamentals, contagion and sunspots, i.e. exogenous shifts in agents' beliefs.

Keywords: CURRENCIES; PROJECTIONS; MONETARY CRISIS (search for similar items in EconPapers)
JEL-codes: E44 E60 E65 F30 (search for similar items in EconPapers)
Pages: 45 pages
Date: 1999
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco99/39

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