Perspectiveson the Recent Currency Crisis Literature

Author/Editor:

Nancy P. Marion ; Robert P Flood

Publication Date:

September 1, 1998

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In the 1990s, currency crises in Europe, Mexico, and Asia have drawn worldwide attention to speculative attacks on government-controlled exchange rates and have prompted researchers to undertake new theoretical and empirical analysis of these events. This paper provides some perspective on this work and relates it to earlier research. It derives the optimal commitment to a fixed exchange rate and proposes a common framework for analyzing currency crises. This framework stresses the important role of speculators and recognizes that the government’s commitment to a fixed exchange rate is constrained by other policy goals. The final section finds that some crises may be particularly difficult to predict using currently popular methods.

Series:

Working Paper No. 1998/130

Subject:

Conventional peg Currencies Currency crises Domestic credit Exchange rates Financial crises Foreign exchange Money

English

Publication Date:

September 1, 1998

ISBN/ISSN:

9781451855166/1018-5941

Stock No:

WPIEA1301998

Pages:

51

Please address any questions about this title to publications@imf.org