Arbeitspapier
Chronicle of currency collapses: re-examining the effects on output
The impact of currency collapses (i.e. large nominal depreciations or devaluations) on real output remains unsettled in the empirical macroeconomic literature. This paper provides new empirical evidence on this relationship using a dataset for 108 emerging and developing economies for the period 1960-2006. We provide estimates of how these episodes affect growth and output trend. Our main finding is that currency collapses are associated with a permanent output loss relative to trend, which is estimated to range between 2% and 6% of GDP. However, we show that such losses tend to materialise before the drop in the value of the currency, which suggests that the costs of a currency crash largely stem from the factors leading to it. Taken on its own (i.e. ceteris paribus) we find that currency collapses tend to have a positive effect on output. More generally, we also find that the likelihood of a positive growth rate in the year of the collapse is over two times more likely than a contraction, and that positive growth rates in the years that follow such episodes are the norm. Finally, we show that the persistence of the crash matters, i.e. one-time events induce exchange rate and output dynamics that differ from consecutive episodes.
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 1226
- Klassifikation
-
Wirtschaft
Business Fluctuations; Cycles
Foreign Exchange
Open Economy Macroeconomics
Economic Growth of Open Economies
- Thema
-
currency crisis
Exchange Rates
nominal depreciations
nominal devaluations
real output growth
recovery from crises
Währungskrise
Bruttoinlandsprodukt
Abwertung
Schwellenländer
Entwicklungsländer
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Bussière, Matthieu
Saxena, Sweta C.
Tovar, Camilo E.
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2010
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Bussière, Matthieu
- Saxena, Sweta C.
- Tovar, Camilo E.
- European Central Bank (ECB)
Entstanden
- 2010
Ähnliche Objekte (12)
Re-examining inequality persistence
Re-examining inequality persistence
Re-examining progressive halakhah
Re-examining inequality persistence
Re-Examining the Earnings Assimilation of Immigrants
Openness and growth: Re-examining foreign direct investment, trade and output linkages in Latin America
Did Kettlewell commit fraud? Re-examining the evidence
Development and interdisciplinarity: Re-examining the "economics silo"
Did Kettlewell commit fraud? Re-examining the evidence
Re-examining the notion of local economic development (LED) post democratization: anticipated outputs, impediments and future expectation(s)
Re-examining the Wagner's law versus Keynesian hypothesis: evidence from Nigeria
Re-examining adaptation theory using Big Data: Reactions to external shocks
Re-examining inequality persistence
Re-examining inequality persistence
Re-examining progressive halakhah
Re-examining inequality persistence
Re-Examining the Earnings Assimilation of Immigrants
Openness and growth: Re-examining foreign direct investment, trade and output linkages in Latin America
Did Kettlewell commit fraud? Re-examining the evidence
Development and interdisciplinarity: Re-examining the "economics silo"
Did Kettlewell commit fraud? Re-examining the evidence
Re-examining the notion of local economic development (LED) post democratization: anticipated outputs, impediments and future expectation(s)
Re-examining the Wagner's law versus Keynesian hypothesis: evidence from Nigeria
Re-examining adaptation theory using Big Data: Reactions to external shocks
Re-examining inequality persistence
Re-examining inequality persistence
Re-examining progressive halakhah
Re-examining inequality persistence
Re-Examining the Earnings Assimilation of Immigrants
Openness and growth: Re-examining foreign direct investment, trade and output linkages in Latin America
Did Kettlewell commit fraud? Re-examining the evidence
Development and interdisciplinarity: Re-examining the "economics silo"
Did Kettlewell commit fraud? Re-examining the evidence
Re-examining the notion of local economic development (LED) post democratization: anticipated outputs, impediments and future expectation(s)
Re-examining the Wagner's law versus Keynesian hypothesis: evidence from Nigeria