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Output Recovery After Currency Crises

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  • Sheida Teimouri

    (Department of Economics, College of Business Administration, University of Wisconsin-La Crosse, 1725 State Street, La Crosse, WI 54601, USA. E-mails: steimouri@uwlax.edu; tbrooks@uwlax.edu)

  • Taggert J Brooks

    (Department of Economics, College of Business Administration, University of Wisconsin-La Crosse, 1725 State Street, La Crosse, WI 54601, USA. E-mails: steimouri@uwlax.edu; tbrooks@uwlax.edu)

Abstract

This study examines the shape and dynamics of output recovery following currency crises characterized by currency crashes or large reserve losses. Our estimation allows output to follow U, V and L-shaped paths following each type of currency crises. The results indicate that output recovery after currency crises is, on average, V-shaped. In addition, currency crashes initially lead to a decline in output, but the output fully recovers to its non-crisis level within three years. Currency crises characterized by large reserve losses lead to a smaller initial output cost, but a larger decline in output in the long run.

Suggested Citation

  • Sheida Teimouri & Taggert J Brooks, 2015. "Output Recovery After Currency Crises," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(1), pages 75-102, March.
  • Handle: RePEc:pal:compes:v:57:y:2015:i:1:p:75-102
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    1. ExIT: reflections of a mainstreamer
      by Alberto Bagnai in Goofynomics on 2017-03-16 22:37:00

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