Title: Explaining the Real Exchange Rate during Sudden Stops and Tranquil Periods
Abstract: This paper untangles the causes behind real exchange rate devaluation events with particular attention paid to the Sudden Stop of capital flows. By utilizing cumulative impulse response function and variance decomposition analysis, we argue that there is the asymmetric response across Sudden Stop and tranquil times. Further comparison across the Sudden Stop in the 80s (debt crisis) and 90s (Sudden Stop crisis), however, reveals that the Sudden Stop disturbance has become more prominent in explaining the real exchange rate disturbance in Sudden Stop crisis of the 1990s rather than debt crisis of the 1980s.
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
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Cited By Count: 1
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