Currency collapses and output dynamics: a long-run perspective
Currency collapses, defined as large nominal depreciations or devaluations, are associated with permanent output losses on the order of 6% of GDP on average. In this feature, we argue that the fact that these losses tend to materialise before a drop in the value of the currency indicates that it is not the large depreciation as such that is costly but the factors leading to the currency collapse. Taken on its own, the drop in the exchange rate actually has a positive effect on output.
Volume (Year): (2010)
Issue (Month): (June)
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- Bussière, Matthieu & Saxena, Sweta C. & Tovar, Camilo E., 2012.
"Chronicle of currency collapses: Re examining the effects on output,"
Journal of International Money and Finance,
Elsevier, vol. 31(4), pages 680-708.
- Bussière, Matthieu & Saxena, Sweta C. & Tovar, Camilo E., 2010. "Chronicle of currency collapses: re-examining the effects on output," Working Paper Series 1226, European Central Bank.
- Matthieu Bussière & Sweta c Saxena & Camilo Tovar, 2010. "Chronicle of currency collapses: re-examining the effects on output," BIS Working Papers 314, Bank for International Settlements.
- Stephen G. Cecchetti & Marion Kohler & Christian Upper, 2009.
"Financial Crises and Economic Activity,"
NBER Working Papers
15379, National Bureau of Economic Research, Inc.
- Stephen G. Cecchetti & Marion Kohler & Christian Upper, 2009. "Financial crises and economic activity," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 89-135.
- Camilo E Tovar, 2006. "Devaluations, output and the balance sheet effect: a structural econometric analysis," BIS Working Papers 215, Bank for International Settlements.
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