Output costs, currency crises and interest rate defence of a peg

Economic Journal

Volumn 117, Issue 516, 2007, Pages 216-239

  Lahiri, Amartya ^a   Végh, Carlos A ^b  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

^b UNIVERSITY OF MARYLAND   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CENTRAL BANK; CURRENCY; FINANCIAL CRISIS; INTEREST RATE; TRADE-OFF;

EID: 33846394089     PISSN: 00130133     EISSN: 14680297     Source Type: Journal    
DOI: 10.1111/j.1468-0297.2007.02008.x     Document Type: Article

References (19)

1. Agenor, P.R. and Aizenman, J. (1999). 'Financial sector inefficiencies and coordination failures: Implications for crisis management', NBER Working Paper No. 7446.
2. Burnside, C., Eichenbaum, M. and Rebelo, S. (2001 a). 'Prospective deficits and the Asian currency crisis'. Journal of Political Economy, vol. 109, pp. 1155-97.
3. Burnside, C., Eichenbaum, M. and Rebelo, S. (2001 b). 'Hedging and financial fragility in fixed exchange rate regimes', European Economic Review, vol. 45, pp. 1151-93.
4. Calvo, G., and Reinhart, C. (1999). 'When capital flows come to a sudden stop: Consequences and policy options', mimeo, University of Maryland.
5. Calvo, G. and Végh, C. (1995). 'Fighting inflation with high interest rates: The small open economy case under flexible prices', Journal of Money, Credit, and Banking, vol. 27, pp. 49-66.
6. Correia, I., Neves, J. and Rebelo, S. (1995). 'Business cycles in a small open economy', European Economic Review, vol. 39, pp. 1089-113.
7. Dekle, R., Hsiao, C. and Wang, S. (2001). 'Interest rate stabilization of exchange rates and contagion in the Asian crisis countries', in (R. Glick, R. Moreno, and M. Spiegel, eds.), Financial Crises in Emerging Markets, pp. 347-79, Cambridge: Cambridge University Press.
8. Drazen, A. (2003). 'Interest rate defence against speculative attack as a signal: A primer', in (M.P. Dooley and J.A. Frankel, eds.), Managing Currency Crises in Emerging Markets, pp. 37-54, Chicago: University of Chicago Press.
9. Easterly, W., Mauro, P. and Schmidt-Hebbel, K. (1995). 'Money demand and seigniorage-maximizing inflation', Journal of Money, Credit, and Banking, vol. 27, pp. 583-603.
10. Edwards, S., and Végh, C. (1997). 'Banks and macroeconomic disturbances under predetermined exchange rates', Journal of Monetary Economics, vol. 40, pp. 239-78.
11. Fischer, S. (1998). 'The IMF and the Asian crisis', mimeo, IMF.
12. Flood, R., and Garber, P. (1984). 'Collapsing exchange-rate regimes: some linear examples', Journal of International Economics, vol. 17, pp. 1-13.
13. Flood, R., and Jeanne, O. (2005). 'An interest rate defence of a fixed exchange rate?', Journal of International Economics, vol. 66, pp. 471-84.
14. Greenwood, J., Hercowitz, Z. and Huffman, G. (1988). 'Investment, capacity utilization, and the real business cycle', American Economic Review, vol. 78, pp. 402-17.
15. Gupta, P., Mishra, D. and Sahay, R (2002). 'Output response during currency crises', mimeo, IMF and the World Bank.
16. Kraay, A., (2003). 'Do high interest rates defend currencies during speculative attacks?', Journal of International Economics, vol. 59, pp. 297-321.
17. Krugman, P. (1979). 'A model of balance-of-payments crises', Journal of Money, Credit and Banking, vol. 11, pp. 311-25.
18. Lahiri, A. and Végh, C. (2003). 'Delaying the inevitable: interest rate defence and BOP crises', Journal of Political Economy, vol. 111, 404-24.
19. Rebelo, S. and Végh, C. (2002). 'When is it optimal to abandon a fixed exchange rate?, mimeo, Northwestern University and UCLA.