Emerging markets (sometimes endowed with fertile pampas) have limited access to world capital markets and suffer from original sin: they cannot borrow in their own currency. Does this mean that monetary and exchange rate policy has non-standard effects in such countries? We develop a simple...

To update a famous old statistic: a political leader in a developing country is almost twice as likely to lose office in the 6 months following a currency crash as otherwise. This difference, which is highly significant statistically, holds regardless whether the devaluation takes place in the...

We study the relation among exchange rates, balance sheets, and macroeconomic outcomes in a small open economy. Because liabilities are dollarized,' a real devaluation has detrimental effects on entreprenurial net worth, which in turn constrains investment due to financial frictions. But there...

When thinking about how the gold standard worked, economists tend to focus on issues of price level determination and the self-correcting role of gold production.1 Less attention is usually given to the international adjustment mechanism. However, the international adjustment mechanism is...

This paper assesses the extent to which crashes in emerging market currencies are predictable using simple logit models based on lagged macroeconomic and financial data. To evaluate our model, we calculate trading strategies in which an investor goes long or short in the currency depending on...

Mit fortschreitender Globalisierung nimmt die Bedeutung internationaler Wirtschaftsbeziehungen zu. In diesem Buch werden deren Grundlagen in vier größeren Themenblöcken vorgestellt. In der Außenhandelstheorie wird gezeigt, inwiefern Freihandel für ein ganzes Land von Vorteil sein kann, und...

This paper studies the links between current accounts and relative price levels, finding that current account changes are associated with sizable future relative price levels effects. This is done in panel regressions of the Penn effect, adding a lagged current account / GDP and other...