The Determinants of Currency Crises: A Political Economy Approach

Cover......Page 1
Contents......Page 6
List of Tables......Page 8
List of Figures......Page 9
Acknowledgments......Page 10
1 Introduction......Page 12
2.1 Introduction......Page 18
2.2 Ending gold convertibility in the 1930s......Page 20
2.3 Coalition bickering in Turkey, 2000–2001......Page 25
2.4 Meltdown in Argentina, 1991–2002......Page 30
2.5 Emerging political patterns......Page 37
3.1 Introduction......Page 42
3.2 A basic second-generation model......Page 44
3.2.1 The credibility problem of currency pegs......Page 45
3.2.2 Two types of commitment devices......Page 50
3.3 Uncertainty and the role of elections......Page 55
3.4 A fiscal veto player......Page 62
3.4.1 Currency crises and fiscal policy decisions......Page 65
3.4.2 The scope for intra-governmental conflict......Page 75
3.4.3 A stochastic fiscal target......Page 79
3.5 Lobbying and exchange rate stability......Page 85
4.1 Introduction......Page 95
4.2 Literature survey......Page 97
4.3 Data set and empirical strategy......Page 102
4.3.1 Country sample and crisis measure......Page 103
4.3.2 The choice of regressors......Page 106
4.3.3 Empirical strategy......Page 111
4.4 Key findings......Page 113
4.4.1 Descriptive statistics......Page 114
4.4.2 Political-economy logit models......Page 118
4.5 Robustness checks......Page 130
4.6.1 The link between elections and crises......Page 134
4.6.2 The link between left Governments and crises......Page 137
5 Conclusion......Page 139
Appendix A: Deriving the Supply Function......Page 147
Appendix B: Survey of Econometric Studies......Page 149
Appendix C: Data Issues......Page 157
Notes......Page 162
Bibliography......Page 182
C......Page 194
E......Page 195
I......Page 196
N......Page 197
S......Page 198
Z......Page 199