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Some Parallels Between Currency and Banking Crises: A Comment

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  • Reinhart, Carmen

Abstract

Comment: What Nancy Marion does in this paper is to present a cohesive survey of three strands of literature: the theoretical literature on currency crises, banking crises, and the more recent papers that have attempted to link the two. It is the "twin crisis" literature, which focuses on banking crises in open economy models, that the paper devotes the most attention to. Like the literature on currency crises, very different interpretations of the causes of the twin crises have been offered and this paper lays out some of the key differences between first generation models, which stress the role of economic fundamentals, and second generation models, which highlight the role of self-fulfilling crises and multiplicity of equilibria.

Suggested Citation

  • Reinhart, Carmen, 1999. "Some Parallels Between Currency and Banking Crises: A Comment," MPRA Paper 13197, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13197
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    References listed on IDEAS

    as
    1. Gerlach, Stefan & Smets, Frank, 1995. "Contagious speculative attacks," European Journal of Political Economy, Elsevier, vol. 11(1), pages 45-63, March.
    2. Roberto Chang & Andres Velasco, 1998. "Financial crises in emerging markets: a canonical model," FRB Atlanta Working Paper 98-10, Federal Reserve Bank of Atlanta.
    3. Kaminsky, Graciela L & Reinhart, Carmen M, 1998. "Financial Crises in Asia and Latin America: Then and Now," American Economic Review, American Economic Association, vol. 88(2), pages 444-448, May.
    4. Dooley, Michael P, 2000. "A Model of Crises in Emerging Markets," Economic Journal, Royal Economic Society, vol. 110(460), pages 256-272, January.
    5. Kaminsky, Graciela L. & Reinhart, Carmen M., 2000. "On crises, contagion, and confusion," Journal of International Economics, Elsevier, vol. 51(1), pages 145-168, June.
    6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    7. Roberto Chang & Andres Velasco, 1998. "Financial Crises in Emerging Markets," NBER Working Papers 6606, National Bureau of Economic Research, Inc.
    8. Guillermo A. Calvo, 1998. "CAPITAL FLOWS AND CAPITAL-MARKET CRISES: The Simple Economics of Sudden Stops," Journal of Applied Economics, Taylor & Francis Journals, vol. 1(1), pages 35-54, November.
    9. Mr. Ilan Goldfajn & Mr. Rodrigo O. Valdes, 1997. "Capital Flows and the Twin Crises: The Role of Liquidity," IMF Working Papers 1997/087, International Monetary Fund.
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    More about this item

    Keywords

    banking crises currency crashes;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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