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Currency Crashes in Industrial Countries: What Determines Good and Bad Outcomes? *
Author(s) -
Gag Joseph E.
Publication year - 2010
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/j.1468-2362.2010.01261.x
Subject(s) - economics , currency , inflation (cosmology) , monetary economics , exchange rate , unemployment , asset (computer security) , falling (accident) , macroeconomics , medicine , physics , computer security , environmental health , theoretical physics , computer science
Sharp exchange rate depreciations, or currency crashes, are associated with poor economic outcomes in industrial countries only when they are caused by inflationary macroeconomic policies. Moreover, the poor outcomes are attributable to inflationary policies in general and not the currency crashes in particular. On the other hand, crashes caused by rising unemployment or external deficits have always been followed by solid economic growth, rising asset prices and stable or falling inflation rates.