Differences in growth, productivity and inflation levels are going to be a prominent feature of the future of EMU, as the convergence process is still ongoing in the new Member States. This convergence process can be described by the Balassa-Samuelson proposition, which states that faster growth...

The paper discusses and revisits some of the most popular stories behind the 2001 financial crisis in Argentina, i.e. the prolonged overvaluation of the peso owing to the Currency Board arrangement, the lack of fiscal adjustment, and the negative external environment which triggered a “sudden...

The object of this paper is to develop an Early Warning System of Macro Vulnerability for several Latin American countries based on previous work of Kaminsky, Lizondo and Reinhart (1997) and Kaminsky (1998). We build a composite leading indicator that signals macroeconomic vulnerability, showing...

Currency and financial crises are determinants of growth and development, mainly in developing countries subject to shocks, contagion and volatility. A relevant issue when trying to do the implementation of development policies is to anticipate or forecast the occurrence of currency crises that...

Exchange-rate-based stabilisations, even if successful, usually lack credibility initially. This is reflected in high (ex post) real interest rates and some degree of real exchange rate appreciation. Empirical observation suggests that wage inflation declines smoothly over time whilst interest...

This study examines the sources of currency crises in ASEAN. The empirical findings indicate that reserve inadequacy, increase of bank’s claims on private sector, deteriorating trade balance and misalignment of real exchange rate increase the probability of a speculative attack on a currency....

In the Mexican Peso crisis 1994/95, the lack of readily available information, particularly regarding monetary aggregates, has often been commented on. This paper analyzes empirically whether information disparity with respect to economic fundamentals contributed to the crisis. Using historical...

Fundamental sources of the Russian financial crisis in 1998 are discussed. Focus is made on the time horizon of judgements concerning sustainability of the economic policy. It is argued that the macroeconomic policy pursued by the monetary authorities was not robust in a medium run, but, in the...

Since the start of the 1990s, several countries have abandoned fixed- but-adjustable exchange rate regimes. The tendency towards floating exchange rate regimes, or alternatively monetary unions, has given rise to a debate on the disappearance of pure currency crises, and the literature has...

Factor-endowment based trade with the leading economy helps to explain the differing development performances of the Americas and East Asia in the past two centuries. Between 1830 and 1945, labor-abundant Britain, the most advanced country, traded heavily with land-abundant countries in the...