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Currency unions and currency crises: an empirical assessment

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Author Info
Brahima Coulibaly (Board of Governors of the Federal Reserve System, USA)
Abstract

Using panel data of 192 countries from 1970 through 1999, and 195 currency crisis episodes, this study examines the effect of membership in a currency union on the probability of experiencing a currency crisis. Both parametric and non-parametric estimates suggest that membership in a currency union reduces the likelihood of a currency crash. This finding is robust to various definitions of currency crises and exchange rates, across time, and across regions. The results are further confirmed by case studies of some countries that joined or left a currency union. We interpret these findings to suggest that the formation of currency unions should not be ruled out in the debate on stability and the new financial architecture. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/ijfe.363
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.

Volume (Year): 14 (2009)
Issue (Month): 3 ()
Pages: 199-221
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ijf:ijfiec:v:14:y:2009:i:3:p:199-221

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    Other versions:
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    Other versions:
    • Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2002. "Optimal Currency Areas," NBER Working Papers 9072, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Dooley, Michael, 1998. "Speculative Attacks on a Monetary Union?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(1), pages 21-26, January. [Downloadable!] (restricted)
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  18. Reinhart, Carmen & Kaminsky, Graciela & Lizondo, Saul, 1998. "Leading Indicators of Currency Crises," MPRA Paper 6981, University Library of Munich, Germany. [Downloadable!]
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  19. Flood, Robert & Marion, Nancy, 1999. "Perspectives on the Recent Currency Crisis Literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 1-26, January. [Downloadable!] (restricted)
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  20. Atish R. Ghosh & Anne-Marie Gulde & Holger C. Wolf, 2000. "Currency boards: More than a quick fix?," Economic Policy, CEPR, CES, MSH, vol. 15(31), pages 269-335, October. [Downloadable!] (restricted)
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