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Macroeconomic costs of currency crises in BRICS: an empirical analysis

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  • Balaga Mohana Rao
  • Puja Padhi

Abstract

The present study examines the behaviour of macroeconomic indicators during the currency crises in BRICS from 1996:Q1 through 2015:Q4. We identify 22 crisis episodes based on EMP index. Our primary results suggest that output, foreign reserves, broad money growth and REER see a steep decline due to crisis episodes. Whereas inflation, current account deficit, unemployment and real interest rate experience a sharp rise due to crises. The results from Panel VAR show that output declines due to currency crises apart from supporting the primary results. The results from the Fixed Effects methods also show that currency crises negatively affect output.

Suggested Citation

  • Balaga Mohana Rao & Puja Padhi, 2020. "Macroeconomic costs of currency crises in BRICS: an empirical analysis," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 13(3), pages 223-243, September.
    • Handle: RePEc:taf:macfem:v:13:y:2020:i:3:p:223-243
    DOI: 10.1080/17520843.2020.1749103
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