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Managing new-style currency crises: the swan diagram approach revisited

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  • Ramkishen S. Rajan

    (George Mason University, VA, USA)

Abstract

The new-style currency crises that have afflicted a number of developing and emerging economies of late are characterised by sudden stops in capital inflows and adverse balance sheet effects. Given the potential high costs of these crises, there remains an ongoing debate on how they might best be managed when they do arise. This paper argues that the age-old Swan diagram, appropriately modified, is able to provide useful insights into how a country might manage a new-style crisis via a combination of adjustment (which involves expenditure switching and reducing polices) and financing. Copyright © 2006 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 19 (2007)
Issue (Month): 5 ()
Pages: 583-606

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Handle: RePEc:wly:jintdv:v:19:y:2007:i:5:p:583-606

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Cited by:
  1. Ramkishen S. Rajan, 2006. "Monetary and Financial Cooperation in Asia : Emerging Trends and Prospects," Finance Working Papers 22125, East Asian Bureau of Economic Research.

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