IMF Working Papers

Perspectiveson the Recent Currency Crisis Literature

By Nancy P. Marion, Robert P Flood

September 1, 1998

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Nancy P. Marion, and Robert P Flood. Perspectiveson the Recent Currency Crisis Literature, (USA: International Monetary Fund, 1998) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In the 1990s, currency crises in Europe, Mexico, and Asia have drawn worldwide attention to speculative attacks on government-controlled exchange rates and have prompted researchers to undertake new theoretical and empirical analysis of these events. This paper provides some perspective on this work and relates it to earlier research. It derives the optimal commitment to a fixed exchange rate and proposes a common framework for analyzing currency crises. This framework stresses the important role of speculators and recognizes that the government’s commitment to a fixed exchange rate is constrained by other policy goals. The final section finds that some crises may be particularly difficult to predict using currently popular methods.

Subject: Conventional peg, Currencies, Currency crises, Domestic credit, Exchange rates, Financial crises, Foreign exchange, Money

Keywords: Capital gain, Conventional peg, Crisis literature, Currencies, Currency crises, Currency crisis, Currency depreciation, Depreciation rate, Domestic credit, Europe, Exchange rates, Exchange-rate authority, Exchange-rate jump, Exchange-rate parity, Interest rate, Money demand, Price level, Rate change, Rate of exchange, Shadow exchange rate, Shadow exchange rate period, Shadow rate, Speculative attack, WP

Publication Details

  • Pages:

    51

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1998/130

  • Stock No:

    WPIEA1301998

  • ISBN:

    9781451855166

  • ISSN:

    1018-5941

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