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The twin crises: the causes of banking and balance-of-payments problems Author info | Abstract | Publisher info | Download info | Related research | Statistics Graciela L. Kaminsky
Carmen M. Reinhart
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In the wake of the ERM and Mexican currency crises, the subject of balance-of-payments crises has come to the forefront of academic and policy discussions. This paper focuses on the potential links between banking and balance-of-payments crises. We examine these episodes for a large number of countries and find that knowing that there are banking problems helps in predicting balance-of-payments crises, but the converse is not true; financial liberalization usually predates banking crises, indeed, it helps predict them. Rather than a causal relationship from banking to balance-of-payments crises, the macroeconomic "stylized facts" that characterize these episodes point to common causes.
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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number
544.
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Date of creation: 1996Date of revision:
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Keywords: Balance of payments Bank failures Other versions of this item:
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"The twin crises: the causes of banking and balance-of-payments problems ,"
International Finance Discussion Papers
544, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!]
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