Article ID Journal Published Year Pages File Type
5102175 The North American Journal of Economics and Finance 2017 12 Pages PDF
Abstract
Is there any factor that is not analyzed in the literature but is important for preventing currency crises? I argue that exports are an important factor to prevent currency crises that has not been frequently analyzed in the existing theoretical literature. Using the third generation model of currency crises, I derive a simple and intuitive formula that captures an economy's structural vulnerability characterized by the elasticity of exports and repayments for foreign currency denominated debt. I graphically show that the possibility of currency crisis equilibrium depends on this structural vulnerability and also analyze how this vulnerability impacts the effectiveness of monetary policy response.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
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