Currency Crises, Capital Account Liberalization, and Selection Bias
نویسندگان
چکیده
Are countries with unregulated capital flows more vulnerable to currency crises? Efforts to answer this question properly must control for self-selection bias, because countries with liberalized capital accounts may also have sounder economic policies and institutions that make them less likely to experience crises. We employ a matching and propensityscore methodology to address this issue in a panel analysis of developing countries. Our results suggest that, after controlling for sample selection bias, countries with liberalized capital accounts experience a lower likelihood of currency crises.
منابع مشابه
EPRU Working Paper Series
Are countries with unregulated capital flows more vulnerable to currency crises? Efforts to answer this question properly must control for “self selection” bias since countries with liberalized capital accounts may also have more sound economic policies and institutions that make them less likely to experience crises. We employ a matching and propensity score methodology to address this issue i...
متن کاملDe facto exchange rate regimes and currency crises: Are pegged regimes with capital account liberalization really more prone to speculative attacks?
This paper empirically examines whether de facto exchange rate regimes affect the occurrence of currency crises in 84 countries over the 1980–2001 period by using the probit model. We employ the de facto classification of Reinhart and Rogoff (2004) that allows us to estimate the impact of relatively long-lived exchange rate regimes on currency crises with much greater precision. We find that pe...
متن کاملLiberalization Sequencing and Currency Instability: A Case Study of 20 Emerging Economies
Abstract Financial crises and currency instabilities within developing and emerging economies during the last decade had a tremendous impact on the economic performance and increased vulnerability of economies against domestic and foreign shocks. The timing of capital liberalization is one of the significant debates among other issues related to currency instability, and it would be more conven...
متن کاملLiberalization of Capital Account with China’s Characteristics
1. Introduction Unlike other crisis-hit developing countries (Mexico, Korea, Thailand and Brazil) known by their large-scale utilization of foreign capital, China weathered the storm in 1997 safe and sound. However, some analysts said that China would have involved itself into the crisis if the Asian financial crisis came two years later. Many academic papers like Huang and Yang (1998) attribut...
متن کاملThe Illusive Quest: Do International Capital Controls Contribute to Currency Stability?
Available online 23 July 2010 We investigate the effectiveness of capital controls in insulating economies from currency crises, focusing in particular on both direct and indirect effects of capital controls and how these relationships may have changed over time in response to global financial liberalization and the greater mobility of international capital. We predict the likelihood of currenc...
متن کامل