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Exchange Arrangements and Currency Crises: What s the matter with the exchange rate classification?

Author

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  • Alexis CRUZ-RODRIGUEZ

    (Department of Economics, Pontificia Universidad Cat lica Madre y Maestra, Dominican Republic.)

Abstract

The purpose of this paper is to empirically investigate whether certain exchange rate arrangements are more prone to currency crises using a probit model. We define a currency crisis as a period characterised by the presence of intense foreign exchange market pressure. The definition is based on a foreign exchange market pressure index (MPI). If the value of the MPI is above a certain threshold, we define that period as a crisis state; otherwise the period is defined as a tranquil state. The definition of currency crises used in this paper focuses on discrete events.

Suggested Citation

  • Alexis CRUZ-RODRIGUEZ, 2016. "Exchange Arrangements and Currency Crises: What s the matter with the exchange rate classification?," Journal of Economics and Political Economy, EconSciences Journals, vol. 3(2), pages 377-392, June.
    • Handle: RePEc:cvv:journ1:v:3:y:2016:i:2:p:377-392
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    References listed on IDEAS

    as
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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