Current Account Reversals and Currency Crises: Empirical Regularities

Gian Maria Milesi-Ferretti () and Assaf Razin

No 6620, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies sharp reductions in current account deficits and large exchange rate depreciations in low- and middle-income countries. It examines which factors help predict the occurrence of a reversal or a currency crisis, and how these events affect macroeconomic performance. It finds that both domestic factors, such as the low reserves, and external factors, such as unfavorable terms of trade and high interest rates in industrial countries, trigger reversals and currency crises. The two types of events are, however, distinct; indeed, current account imbalances are not sharply reduced in the years following a currency crisis. Economic performance around these events is also quite different. An exchange rate crash is associated with a fall in output growth and a recovery thereafter, while for reversal events there is no systematic evidence of a growth slowdown.

JEL-codes: F31 F32 (search for similar items in EconPapers)
Date: 1998-06
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (157)

Published as Current Account Reversals and Currency Crises: Empirical Regularities , Gian Maria Milesi Ferretti, Assaf Razin. in Currency Crises , Krugman. 2000

Downloads: (external link)
http://www.nber.org/papers/w6620.pdf (application/pdf)

Related works:
Chapter: Current Account Reversals and Currency Crises: Empirical Regularities (2000)
Working Paper: Current Account Reversals and Currency Crises: Empirical Regularities (1998)
Working Paper: Current Account Reversals and Currency Crises: Empirical Regularities (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:6620

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6620

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().