Sudden Stops and Currency Crashes
This paper investigates which factors determine whether sudden stops in international capital flows are followed by a currency crash using data for 85 economies in the period 1980–2012. An event study approach is used for an 11-year window around the crises for nine potential explanatory variables. In addition, the paper estimates discrete-choice panel models. The results suggest that low trade openness, shallow financial markets, and current account imbalances increase the likelihood that a sudden stop will be followed by a currency crash. Moreover, it is established that the impact of these factors differs across different exchange rate regimes.
Year of publication: |
2014
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Authors: | Zhao, Yanping ; Haan, Jakob ; Scholtens, Bert ; Yang, Haizhen |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 22.2014, 4, p. 660-685
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Publisher: |
Wiley Blackwell |
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