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Description

This study contributes to the literature on capital account crises in two ways. First, our analysis of crisis episodes between 1994 and 2002 establishes a clear relationship between the persistence of crises, their complexity, and the intensity of movement of key macroeconomic variables. Second, we provide a systematic examination of the determinants of crisis duration. Our econometric analysis suggests that initial conditions and the external environment plays a key role in determining crisis persistence. The policy response also matters, but cannot offset a record of poor past policies. Overall, the results underscore the critical importance of crisis prevention efforts.

Keywords

Capital Account Crises, Persistence, Balance Sheets, Capital Controls, Capital Outflows, Data Analysis, Economic Models, Exchange Rate Regimes, External Sector

Taxonomy

Balance of payments, Capital account, Capital markets, Economic policy, Financial crisis, Financial institutions and markets, Fiscal policy, International financial system, Monetary policy

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More publications in this series: Working Papers

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More publications by: David Hofman ; Ruben Atoyan ; Mauro Mecagni