Currency Crisis Transmission through International Trade

Jamal Haidar ()

Working Paper from Harvard University OpenScholar

Abstract: The Eurozone recent crisis has shown how balance of payments problems in less developed European Monetary Union (EMU) member countries can affect EMU trading partners, spreading the crisis to a larger group of countries. This paper introduces a three-country dynamic general equilibrium model to analyze whether and how terms of trade effects can generate a spillover effect or a currency crisis transmission between countries. Specifically, using a two period model, it incorporates world market clearing conditions for tradables into a new theoretic model, analyzes net capital flow movements between countries, and establishes cross-border macroeconomic linkages. This paper shows how a currency crisis can transmit through the real (trade) sector channel of the economy.

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Journal Article: Currency crisis transmission through international trade (2012)
Working Paper: Currency Crisis Transmission through International Trade (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:qsh:wpaper:309956

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