Assessing the Effect of Current Account and Currency Crises on Economic Growth

Arbeitspapier

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 coe?cients. 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper ; No. 2008-01

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Statistical Simulation Methods: General ; Economic Development: General ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Current Account Adjustment; Short-term Capital Movements
• Subject: Currency crises ; Current account reversals ; Treatment Model ; Discrete dependent variable ; Efficient Importance Sampling ; Panel Data ; Währungskrise ; Leistungsbilanz ; Zahlungsbilanzungleichgewicht ; Wirtschaftswachstum ; Panel ; Schätzung ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aßmann, Christian
• Event: Veröffentlichung
• (who): Kiel University, Department of Economics
• (where): Kiel
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/22049
• Last update: 10.03.2025, 11:42 AM CET