Are Currency Crises Predictable?

IMF Working Paper No. 97/159

Posted: 10 Jun 1998

See all articles by Ilan Goldfajn

Ilan Goldfajn

Gávea Investimentos; Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics; Central Bank of Brazil

Rodrigo Valdés

Central Bank of Chile; Ministry of Finance, Chile

Multiple version iconThere are 3 versions of this paper

Date Written: December 1997


This paper studies whether exchange rate expectations and overvaluations are predictors of currency crises. The results suggest that overvaluation has predictive power in explaining crises. However, although expected depreciation obtained from survey data partially takes different exchange rate misalignment measures into consideration, expectations fail to anticipate currency crises.

JEL Classification: F31, F33

Suggested Citation

Goldfajn, Ilan and Valdés, Rodrigo O., Are Currency Crises Predictable? (December 1997). IMF Working Paper No. 97/159. Available at SSRN:

Ilan Goldfajn (Contact Author)

Gávea Investimentos ( email )

Rua Dias Ferreira, 190 7th andar
22431-050 Rio de Janeiro

Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics ( email )

Rua Marques de Sao Vicente, 225/206F
Rio de Janeiro, RJ 22453

Central Bank of Brazil ( email )

P.O. Box 08670
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Brasilia DF 70074-900, Distr. Federal 70074-900
61-4143232 (Phone)
61-2260767 (Fax)

Rodrigo O. Valdés

Central Bank of Chile ( email )

Agustinas 1180
Research Department
+56 2 670 2000 (Phone)
+56 2 670 2231 (Fax)

Ministry of Finance, Chile

Teatinos 120
Santiago, 8340487

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