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Contagion and Trade: Why Are Currency Crises Regional? / Reuven Glick, Andrew K. Rose.
- Format:
- Book
- Author/Creator:
- Glick, Reuven.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6806.
- NBER working paper series no. w6806
- Language:
- English
- Subjects (All):
- Devaluation of currency.
- Foreign exchange rates.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Contagion and Trade
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Cambridge, Massachusetts : National Bureau of Economic Research, 1998.
- Summary:
- Currency crises tend to be regional; they affect countries in geographic proximity. This suggests that patterns of international trade are important in understanding how currency crises spread, above and beyond any macroeconomic phenomena. We provide empirical support for this hypothesis. Using data for five different currency crises (in 1971, 1973, 1992, 1994, and 1997) we show that currency crises affect clusters of countries tied together by international trade. By way of contrast, macroeconomic and financial influences are not closely associated with the cross-country incidence of speculative attacks. We also show that trade linkages help explain cross-country correlations in exchange market pressure during crisis episodes, even after controlling for macroeconomic factors.
- Notes:
- Print version record
- November 1998.
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