An Iron Law of Currency Crises: The Divergence of the Nominal and the Real Exchange Rate and Increasing Current Account Deficits

The currency crises of the 1990s all exhibit a divergence of the nominal and the real exchange rate together with an increase in the negative current account. The nominal rate does not reflect inflation differences fully and the ensuing real appreciation leads to a negative current account. This pattern holds for the Czech, the Mexican, Brazilian, Argentinian as well as the South Korean currency crises. It seems to be an iron law of currency crises.

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Year of publication:	2002-05
Authors:	Siebert, Horst
Institutions:	Institut für Weltwirtschaft (IfW)
Subject:	Currency Crisis \| Real Exchange Rate \| Devaluation

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Extent:	application/pdf
Series:	Kiel Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	14 pages
Classification:	E0 - Macroeconomics and Monetary Economics. General ; F3 - International Finance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005700507