A major feature characterizing recent currency crises in emerging markets has been the large proportion of private foreign currency debt. This feature has made the conduct of monetary policy particularly difficult. This paper proposes a simple model to better understand these issues where firms...

[...]We begin by discussing the so-called first generation ofmodels, in which crises are viewed in the literature as theunavoidable result of unsustainable policies or fundamentalimbalances. Next, we survey the literature on the secondgeneration of models, which highlights the possibility of...

This paper studies the mechanism of international transmission of exchange rate shocks within a three-country Center-Periphery model, providing a choice-theoretic framework for the policy analysis and empirical assessment of competitive devaluations. If relative prices and terms of trade exhibit...

Two theories of the causes of currency crises prevail in the economic literature. The first traces currency instability to countries' structural imbalances and weak policies; the second identifies arbitrary shifts in market expectations as the principal source of instability. The authors of this...

This paper studies the mechanism of international transmission of exchange rate shocks within a 3-country Center-Periphery model, providing a choice-theoretic framework for the policy analysis and empirical assessment of competitive devaluations. If relative prices and terms of trade exhibit...

[...]In our view, this apparently surprising immunity of the U.S.economy to the Asia crisis reflects the fact that the original wayof thinking about the crisis was flawed. First, it focused only ondemand-side channels and ignored the supply side. Second, thedepreciation of the Asian currencies...