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Banking and Currency Crises and Systemic Risk: A Taxonomy and Review

  • G.G. Kaufman
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    Many countries have experienced banking and currency crises in recent years. Although these crises appear to share many common causes and consequences, they have generally been analysed by different sets of economists. This paper develops a common framework, applies this framework to analysing recent crises, evaluates the historical evidence, and suggests potential solutions. Governments are identified as one of the major causes of the crises through first providing poorly structured financial guarantees that both increase fragility and misallocate resources, then pursuing unstable macroeconomic policies that produce losses, and finally attempting to conceal the problems as long as possible before being forced to take corrective actions that, at least in the short run, often exacerbate the costs before restoring equilibrium.

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    File URL: http://www.dnb.nl/binaries/sr048_tcm46-146826.pdf
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    Paper provided by Netherlands Central Bank in its series DNB Staff Reports (discontinued) with number 48.

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    Length: 84 pages
    Date of creation: 2000
    Date of revision:
    Handle: RePEc:dnb:staffs:48
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    Web page: http://www.dnb.nl/en/

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    29. Michael Mussa & Giovanni Dell'Ariccia & Barry J. Eichengreen & Enrica Detragiache, 1998. "Capital Account Liberalization: Theoretical and Practical Aspects," IMF Occasional Papers 172, International Monetary Fund.
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