Interpreting Currency Crises: A Review of Theory, Evidence, and Issues

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Interpreting Currency Crises: A Review of Theory, Evidence, and Issues

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Omar F. Saqib

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Omar Farooq Saqib

Abstract

The main objective of this paper is to understand the causes and symptoms of currency crises by reviewing its seminal literature, establishing its determinants, and outlining some of the relevant issues. The paper highlights the need to comprehend the process, which may lead to the inconsistency of the policies and render the situation favourable for a speculative attack. This involves, broadening the determinants of exchange rate crises beyond pure economic fundamentals through incorporating non-economic factors, such as political incentives on macroeconomic policy making. In effect, the review accentuates upon the need to develop a model that bridges the gap between the conventional and non-conventional determinants of a currency crisis.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 303.

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Length: 42 p.
Date of creation: 2002
Date of revision:
Handle: RePEc:diw:diwwpp:dp303

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This paper has been announced in the following NEP Reports:

NEP-ALL-2002-11-04 (All new papers)
NEP-CBA-2002-11-04 (Central Banking)
NEP-FIN-2002-11-04 (Finance)
NEP-IFN-2002-11-04 (International Finance)
NEP-PKE-2002-11-04 (Post Keynesian Economics)
NEP-RMG-2002-11-04 (Risk Management)

References listed on IDEAS
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Mark P. Taylor & Ronald MacDonald, 1991. "Exchange Rate Economics: A Survey," IMF Working Papers 91/62, International Monetary Fund.
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Other versions:
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Other versions:
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Other versions:
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Other versions:
- Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," NBER Working Papers 7265, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Jeffrey A. Frankel & Giampaolo Galli & Alberto Giovannini, 1996. "The Microstructure of Foreign Exchange Markets," NBER Books, National Bureau of Economic Research, Inc, number fran96-1.

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Simón Sosvilla-Rivero & Francisco Pérez-Bermejo, . "Credibility and Duration in Target Zones: Evidence from the EMS," Working Papers 2003-19, FEDEA. [Downloadable!]

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