NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Clashes Between Internal and External Stability Goals End in Currency Crises, 1797-1994

Michael D. Bordo, Anna J. Schwartz

NBER Working Paper No. 5710 (Also Reprint No. r2130)
Issued in August 1996
NBER Program(s):   ME   IFM

We argue that recent currency crises reflect clashes between fundamentals and pegged exchange rates, just as did crises in the past. We reject the view that crises reflect self-fulfilling prophecies that are not closely related to measured fundamentals. Doubts about the timing of a market attack on a currency are less important than the fact that it is bound to happen if a government's policies are inconsistent with pegged exchange rates. We base these conclusions on a review of currency crises in the historical record under metallic monetary regimes and of crises post-World War II under Bretton Woods, and since, in European and Latin American pegged exchange rate regimes.

download in pdf format
   (1978 K)

email paper

This paper is available as PDF (1978 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5710

Published: Open Economies Review, Vol. 7 pp. 437-468, December 1996

Users who downloaded this paper also downloaded these:
Flood and Marion w6380 Perspectives on the Recent Currency Crisis Literature
Krugman Are Currency Crises Self-Fulfilling?
Eichengreen and Bordo w8716 Crises Now and Then: What Lessons from the Last Era of Financial Globalization
Bordo, Mizrach, and Schwartz w5371 Real Versus Pseudo-International Systemic Risk: Some Lessons from History
Eichengreen and Hausman w7418 Exchange Rates and Financial Fragility
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us