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Currency crisis and external fragility: a Minskyan interpretation applied to the Brazilian economy between 1999 and 2013 [Currency crisis and external fragility: a Minskyan interpretation applied to the Brazilian economy between 1999 and 2013]

Author

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  • Victor Hugo Rocha Sarto

    (UNESP)

  • Luciana Togeiro de Almeida

    (UNESP)

Abstract

This work has two goals. The first one is to develop an interpretation for open economies founded on Minsky’s financial fragility hypothesis about the process of a currency crisis and its determinants. The deterioration of an economy’s external financial structure is identified as the reason for the increase of its crisis susceptibility. With this approach, we create external fragility indexes intending to measure an economy’s crisis susceptibility. Our second objective is to evaluate the Brazilian external fragility between 1999 and 2013using the index and the interpretation previously developed. The results suggest that Brazilian’s external fragility suffered a gradual and significant decrease and tends to follow stable trend in the coming years.

Suggested Citation

  • Victor Hugo Rocha Sarto & Luciana Togeiro de Almeida, 2015. "Currency crisis and external fragility: a Minskyan interpretation applied to the Brazilian economy between 1999 and 2013 [Currency crisis and external fragility: a Minskyan interpretation applied to t," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 25(spe), pages 891-938, December.
    • Handle: RePEc:nov:artigo:v:25:y:2015:i:spe:p:891-938
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    References listed on IDEAS

    as
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    2. Luiz Fernando Rodrigues de Paula & Antonio José Alves Júnior, 1999. "Fragilidade financeira externa e os limites da política cambial no Real," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(1), pages 72-93.
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    4. Marco Flávio da Cunha Resende & Adriana Amado, 2004. "Liquidez internacional e ciclo reflexo: algumas observações para a América Latina," Textos para Discussão Cedeplar-UFMG td245, Cedeplar, Universidade Federal de Minas Gerais.
    5. Luiz Fernando Rodrigues de Paula & Antonio José Alves Júnior, 1999. "Fragilidade financeira externa e os limites da política cambial no Real," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(1).
    6. Philip Arestis & Luiz Fernando Paula (ed.), 2008. "Financial Liberalization and Economic Performance in Emerging Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-22774-3.
    7. Philip Arestis, 2002. "Financial crisis in Southeast Asia: dispelling illusion the Minskyan way," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 26(2), pages 237-260, March.
    8. Mario Tonveronachi, 2006. "Foreign debt and financial fragility in the perspective of the emerging countries," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(236), pages 23-48.
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    More about this item

    Keywords

    Minsky; currency crisis; external fragility; Brazilian economy;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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