What differentiates the new currency crisis literature from the classi. Table of contents i the classical currency crisis models. It blends narrative and quantitative methods and connects economic outcomes to the underlying political economy of international macroeconomics. This is an incomplete reference list of economic papersbooks that are related to the current asian crisis. The first generation and second generation financial crisis theory finance essay. The asian financial crisis of 1997 is another wellknown example of a currency crisis.
Theoretical models of currency crises are often categorized as first, second, or thirdgeneration, though many models combine elements of more than one generic form. Obstfeld, maurice, the logic of currency crises, working paper no. Other readers will always be interested in your opinion of the books youve read. Paul krugman is the ford international professor of economics at the massachusetts institute of technology and a research associate of the national bureau of economic research. The logic of currency crises maurice obstfeld working paper no.
What are the implications of the escape clause model. National income accounting and the balance of payments 3. The logic of currency crises, nber working papers 4640, national bureau of economic research, inc. This paper then presents two different models in which crisis and realignment result from the interaction of rational private economic actors and a government that pursues welldefined policy goals. We identify the benefits and costs of financial openness in terms of currency crises based on a novel. A crash course in the future of finance by nouriel roubini and stephen mihm was a very interesting book, offering solutions to a stabilize the financial system. Models of currency crises with selffulfilling features. Andersenshocks and the viability of a fixed exchange rate commitment. Currency crisis is one kind of financial crisis, according to eichengreen et al1997, currency crisis is that one country have to give up its original exchange rate system under pressure, its currency devalue considerably, or accept assistance from other institutions. International finance theory and policy 10th edition krugman. Rogoff, the mirage of fixed exchange rates journal of economic perspectives 9, fall 1995. Whether youve loved the book or not, if you give your honest and detailed thoughts then people will find new books that are right for them. After experiencing rapid growth throughout the 1990s, the economies relied heavily on foreign debt to finance their growth, so when the taps were turned off they struggled to meet the debt payments. Empirically, the book combines analyses of crossnational survey data of voters and firms policy evaluations with comparative case studies of national policy responses to the asian financial crisis of 19978 and the recent global financial crisis in eastern europe.
He won the 2008 nobel memorial prize in economic sciences. Products of common causes maurice obstfeld and kenneth rogoff november 2009 abstract this paper makes a case that the global imbalances of the 2000s and the recent global financial crisis are intimately connected. Sep 16, 2017 the classical case for flexible exchange rates rests on the argument that without the constraint of a currency target, policymakers are free to adjust the domestic monetary stance efficiently in response to business cycle disturbances, and choose their own inflation target. Currency crises national bureau of economic research. Jan 01, 2004 journal of international money and finance 18. Obstfeld, models of currency crises with selffulfilling features, nber working paper no. A first stop for readers is the dissenting report by three members of the financial crisis inquiry commission keith hennessey, douglas holtzeakin, and william thomas that zeros in on the key causes of the crisis.
Interestrate and borrowing defense against speculative attack. The new interest has also been driven, however, by the excit ing policy conclusions of new models, most of them inspired by the seminal paper of obstfeld 1994. Obstfeld, the logic of currency crises, nber reprint no. Permission to offer this article was granted by the bank of france to professor obstfeld in a letter dated 20 october 1998. It can be simply the result of the logic of the situation, in which holding a currency will become unattractive once its price is no longer stabi lized, and the end of the price. This model suggests that the period preceding a currency crisis 2for detailed surveys of the theoretical literature see agenor, bhandari, and flood 1992, blackburn and sola 1993, and garber and svensson 1994.
Maurice obstfeld no 4640, nber working papers from national bureau of economic research, inc abstract. Information dissemination in currency crises by christina. The dramatic currency crisis that culminated in the august. Science and education publishing, publisher of open access journals in the scientific, technical and medical fields.
A crash course in the future of finance by nouriel roubini and stephen mihm is a nonfiction financial book. Rational and selffulfilling balanceofpayments crises. What factors determine a governments decision to abandon a currency peg or hang on. And the peg is abandoned because everybody attacked the currency. If you have work related to the crisis but it is not listed here, please follow the steps given at the bottom of this page to have your papers included here. The logic of currency crises, nber working paper no. Obstfeld, w1486 rational and selffulfilling balanceofpayments crises. Nber working paper series the logic of currency crises maurice obstfeld working paper no. The dramatic currency crisis that culminated in the august 1993 widening of exchangerate bands.
Comparison of obstfeld 1996 and morris and shin 1998. Rational and selffulfilling balanceofpayments crises jstor. The logic of currency crises by maurice obstfeld ssrn. This book presents an economic history of international capital mobility in the modern era. Currency crisis models currency crises have been the subject of an extensive economic literature, both theoretical and empirical.
This kind of circular logic is characteristic of the second generation models of currency crises. Models of currency crises with selffulfilling features sciencedirect. As such, sensemaking is about making the intractable actionable. Suppose that your viewof the macroeconomy is a textbook naturalrate. National bureau of economic research, working paper series national bureau of economic research, working paper no. The first generation and second generation financial crisis. The asian crisis home page economics papers on the asian crisis. Currency crisis theories some explanations for the russian case. Once one recognizes that governments borrow international reserves and exercise other policy options to defend fixed exchange rates during. The theory of moral sentiments 1759 and the wealth. Explain the three generations of currency crises models. Krugman author, maurice obstfeld author, marc melitz author ebook pdf instant download table of content 1.
According to a classification system of international monetary fund we can divide economic crisis to currency crisis, banking crisis, systemic financial crisis, debt crisis. That literature, i argue, throws little light on events such as the european exchange rate mechanism collapse of 199293. A currency crisis is an episode in which the exchange rate depreciates substantially during a. Paul krugmans currency and crises is a collection of 11 academic essays on international monetary economics written between the late 1970s and 1980s. No 4640, nber working papers from national bureau of economic research, inc abstract. In a setting of purposeful action by the authorities, the possibility of selffulfilling crises becomes important. Integration, crisis, and growth japanus center ufj bank monographs on international financial markets 19feb2004 by maurice obstfeld, alan m. Budget deficits currency crises currency crisis models.
This paper studies the currency crisis theories, and with the help of them it finds out the main. In a great recession, the case for flexible exchange rates is. Gupta 1996 presents a short survey of theoretical and empirical results on currency and banking crises. The discomfort a government suffers from speculation against its currency determines the strategic incentives of speculators and the scope for multiple currency market equilibria. Tradeoffs among exchange rates, monetary policies, and capital mobility, international finance 0407003, university library of munich, germany. The volume demonstrates that the recent globalization can be. Financial crises and the politics of macroeconomic. The book shows that variation in policy makers willingness to implement. But action is not a separate and later step in sensemaking. Financial crisis books meet your next favorite book. This article was originally published in 1994 in cahiers economiques et monetaires.
There is no universally accepted definition of a currency crisis, but most would agree that they all involve one key element. Country histories on debt, default, and financial crises. A simple example from obstfeld eer 1996 helps to clarify this point. Once one recognizes that governments borrow international reserves and exercise other policy options to defend fixed exchange rates during currency crises, the question arises. International finance theory and policy 10th edition.
337 1252 1348 954 894 74 1187 615 761 1170 1496 199 20 815 163 605 1006 1094 1321 458 947 1350 780 1451 331 1522 1175 943 778 595 800 400 961 928 873 1261 127 930 391