The problem is to evaluate the likelihood that a country will face a currency or balance of payments crisis over a given horizon. When is it rational for market participants to expect a depreciation of the currency? On the basis of considerable empirical studies we know that in both banking and...

The problem is to evaluate the likelihood that a country will face a currency or balance of payments crisis over a given horizon. When is it rational for market participants to expect a depreciation of the currency? On the basis of considerable empirical studies we know that in both banking and...

We first give a brief presentation of the existing single-equation structural models of exchange-rate determination and a survey of how the exchange rate is modeled in the main economy-wide macroeconometric models. We then show, with respect to the lira/$ exchange rate, that the out-of-sample...