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Output Recovery After Currency Crises

Author

Listed:
  • 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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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. ExIT: reflections of a mainstreamer
      by Alberto Bagnai in Goofynomics on 2017-03-16 22:37:00

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    Cited by:

    1. Balaga Mohana Rao & Puja Padhi, 2020. "Common Determinants of the Likelihood of Currency Crises in BRICS," Global Business Review, International Management Institute, vol. 21(3), pages 698-712, June.
    2. Bagnai, Alberto & Granville, Brigitte & Mongeau Ospina, Christian A., 2017. "Withdrawal of Italy from the euro area: Stochastic simulations of a structural macroeconometric model," Economic Modelling, Elsevier, vol. 64(C), pages 524-538.
    3. Alberto Bagnai & Brigitte Granville & Christian Alexander Mongeau Ospina, 2017. "Withdrawal of Italy from the Eurozone: stochastic simulations of a structural macroeconometric model," a/ Working Papers Series 1702, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    4. Ryota Nakatani, 2019. "Output Costs of Currency Crisis and Banking Crisis: Shocks, Policies and Cycles," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(1), pages 83-102, March.

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