Arbeitspapier

Assessing the effect of current account and currency crises on economic growth

Several empirical studies are concerned with measuring the effect of currency and current account crises on economic growth. Using different empirical models this paper serves two aspects. It provides an explicit assessment of country specific factors influencing the costs of crises in terms of economic growth and controls via a treatment type model for possible sample selection governing the occurrence of crises in order to estimate the impact on economic growth correctly. The applied empirical models allow for rich intertemporal dependencies via serially correlated errors and capture latent country specific heterogeneity via random coefficients. For accurate estimation of the treatment type model a simulated maximum likelihood approach employing efficient importance sampling is used. The results reveal significant costs in terms of economic growth for both crises. Costs for reversals are linked to country specific variables, while costs for currency crises are not. Furthermore, shocks explaining current account reversals and growth show strong significant positive correlation.

ISBN: 978-3-931052-90-4

Language: Englisch

Bibliographic citation: Series: BERG Working Paper Series on Government and Growth ; No. 80

Classification: Wirtschaft
Current Account Adjustment; Short-term Capital Movements
Statistical Simulation Methods: General
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
Economic Development: General

Subject: Currency crises
Current account reversals
Treatment Model
Discrete dependent variable
Efficient Importance Sampling
Panel Data

Event: Geistige Schöpfung

(who): Aßmann, Christian

Event: Veröffentlichung

(who): Bamberg University, Bamberg Economic Research Group on Government and Growth (BERG)

(where): Bamberg

(when): 2011

Handle: http://hdl.handle.net/10419/45547

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Aßmann, Christian
Bamberg University, Bamberg Economic Research Group on Government and Growth (BERG)

Time of origin

2011

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