Currency Crises and Output Dynamics

Open Economies Review, February 2015, Volume 26, Issue 1, pp. 139-153

Posted: 25 Feb 2015 Last revised: 27 Feb 2015

See all articles by Arabinda Basistha

Arabinda Basistha

West Virginia University - College of Business & Economics

Sheida Teimouri

University of Wisconsin - La Crosse

Date Written: February 24, 2015

Abstract

Output effects of currency crises are often estimated to be negative and persistent. A new banking crisis database allows us to construct pure currency collapses that are not associated with banking crises. The estimates show that countries facing a pure currency crisis have fully recovery of output in the long-run while twin crisis leads to larger output losses. Allowing for long lags is a critical element in understanding the recovery dynamics. Further analysis reveals that there is a similar lag in the association between export growth and recovery dynamics.

Keywords: Devaluation, Currency crisis, Banking crisis, Exchange rate, Recovery

JEL Classification: E32, F32, F41, F43

Suggested Citation

Basistha, Arabinda and Teimouri, Sheida, Currency Crises and Output Dynamics (February 24, 2015). Open Economies Review, February 2015, Volume 26, Issue 1, pp. 139-153 . Available at SSRN: https://ssrn.com/abstract=2569342

Arabinda Basistha

West Virginia University - College of Business & Economics ( email )

Morgantown, WV 26506-6025
United States

Sheida Teimouri (Contact Author)

University of Wisconsin - La Crosse ( email )

1725 State Street
La Crosse, WI 54601
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
214
PlumX Metrics