An iron law of currency crisis: 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
Authors:	Siebert, Horst
Publisher:	Kiel : Kiel Institute of World Economics (IfW)
Subject:	Währungskrise \| Kaufkraftparität \| Leistungsbilanz \| Abwertung \| Mexiko \| Brasilien \| Argentinien \| Südkorea \| Tschechische Republik \| real exchange rate \| devaluation \| currency crisis

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Series:	Kiel Working Paper ; 1106
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	861985923 [GVK] hdl:10419/2765 [Handle] RePEc:zbw:ifwkwp:1106 [RePEc]
Classification:	E0 - Macroeconomics and Monetary Economics. General ; F3 - International Finance
Source:	EconStor

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