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Currency Crises in Asia and Latin America: A Comparison

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  • Shoji Nishijima

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

In the second half of the 1990s, many Asian and Latin American countries suffered from the currency crises. But the causes and processes of currency crisis are not necessarily the same, though there are many common aspects. The purpose of this paper is to compare the currency crises in both regions paying attention on the inconsistent macroeconomic policies under the rapid liberalization. We first build a theoretical model in which both macro fundamentals and agents' expectations are to play crucial roles. The model implies that a deterioration of macro fundamentals would increase the possibility of currency crisis through changes in behavioral patterns of private agents and government. We then compare the macro fundamentals of the five crisis countries in Asia and Latin America. Among other macro fundamentals, we focus on the soundness of banking sector as one of the most important factors that made the crisis process different in two regions. Finally we examine the future tasks for these countries to stabilize the currencies.

Suggested Citation

  • Shoji Nishijima, 2001. "Currency Crises in Asia and Latin America: A Comparison," Discussion Paper Series 122, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:122
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp122.pdf
    File Function: First version, 2001
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
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    Cited by:

    1. Pablo Bustelo Gómez, 2004. "Capital Flows and Financial Crises: A Comparative Analysis of East Asia (1997-97) and Argentina (2001-02)," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 04-17, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.

    More about this item

    Keywords

    Currencies; Macroeconomics; Expectations;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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