What Causes Currency Crises: Sunspots, Contagion or Fundamentals?
AbstractThis paper is an attempt to explain currency crises and exchange rate movements in open emerging markets during the 1990s. A model is developed that allows a systematic comparison and evaluation of three competing explanations for crises: weak economic fundamentals, contagion and sunspots, i.e. exogenous shifts in agents' beliefs.
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Bibliographic InfoPaper provided by European University Institute in its series Economics Working Papers with number eco99/39.
Length: 45 pages
Date of creation: 1999
Date of revision:
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CURRENCIES ; PROJECTIONS ; MONETARY CRISIS;
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- F30 - International Economics - - International Finance - - - General
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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