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The Role of Institutional Quality in a Currency Crisis Model / Yi Wu.
- Format:
- Book
- Government document
- Author/Creator:
- Wu, Yi.
- Series:
- IMF Working Papers; Working Paper ; No. 2008/005
- IMF Working Papers
- Language:
- English
- Subjects (All):
- Currency crises--Econometric models.
- Currency crises.
- Financial institutions--Econometric models.
- Financial institutions.
- Tax collection--Econometric models.
- Tax collection.
- Physical Description:
- 1 online resource (18 p.)
- Edition:
- 1st ed.
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2008.
- Language Note:
- English
- Summary:
- This paper is a theoretical study of the impact of institutional quality on currency crises from a public finance point of view. Recent empirical studies leave little doubt that weak institutions, including high levels of corruption, hinder economic performance. After the East Asian crisis, many observers have pointed to widespread corruption and crony capitalism as an underlying cause. Despite the popularity of the claim, there are only limited empirical and especially theoretical studies on the link between institutional quality and currency crises. This paper intends to fill in this void. We model institutional weakness as an inefficiency of the tax collection system. The model derived here shows that institutional weakness generally increases the likelihood of the existence of a self-fulfilling crisis equilibrium, and leads to larger currency devaluation when crises happen. However, this relationship could reverse when institutional weakness is very severe.
- Contents:
- Contents; I. Introduction; II. The Model; Figures; 1. Self-fulfilling Currency Crises; III. Institutional quality and self-fulfilling currency crises; 2a. Simulation I; 2b. Simulation II; 2c. Simulation III; IV. Concluding remarks; References
- Notes:
- "January 2008."
- Includes bibliographical references (p. 16).
- Description based on print version record.
- ISBN:
- 9786613821355
- 9781462337651
- 1462337651
- 9781452710754
- 1452710759
- 9781282448162
- 1282448161
- 9781451913200
- 1451913206
- OCLC:
- 568151187
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