Hedging and Financial Fragilities in Fixed Exchange Rate Regimes.

Currency crises that coincide with banking crises tend to share four elements. First, governments provide guarantees to domestic and foreign bank creditors. Second, banks do not hedge their exchange rate risk. Third, there is a lending boom before the crises. Finally, when the currency/banking collapse occurs interest rates rise and there is a persistent decline in output. This paper proposes an explanation for these regularities.

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Year of publication:	1999
Authors:	Burnside, C. ; Eichenbaum, M. ; Rebelo, S.
Institutions:	University of Rochester - Center for Economic Research (RCER)
Subject:	BANKS \| EXCHANGE RATE \| FINANCIAL MARKET

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Extent:	application/pdf
Series:	RCER Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 461 57 pages
Classification:	F31 - Foreign Exchange ; F41 - Open Economy Macroeconomics ; G15 - International Financial Markets ; G21 - Banks; Other Depository Institutions; Mortgages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005200774