The Aftermath of Currency Crises: Exchange Rates, Money Growth, Inflation and Interest Rates in Asia and Latin America

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Abstract/Contents

Abstract: After a fixed exchange rate regime is abandoned during a financial crisis, policymakers in crisis-hit countries face the challenging task of managing exchange rates and conducting monetary policies conductive for growth while combating inflation. This paper studies how crisis-hit countries respond differently in the aftermath of currency crises by analyzing exchange rates, money supplies, inflation and interest rates in two Asian countries—Korea and Thailand—and two Latin American countries—Argentina and Mexico. Their post-crisis policy responses result in three different scenarios: (1) an appreciating currency in a low interest rate and low inflation environment as in the Asian economies; (2) leaving the currency depreciated in a low interest rate and extremely high inflation environment as in Argentina; (3) further currency depreciation in a high interest rate and inflationary environment as in Mexico. This paper emphasizes that currency appreciation is a necessary pre-condition for attaining a low interest rate and low inflation environment in the aftermath of deep currency devaluation.

Type of resource	text
Date created	May 2008

Author	Parapiboon, Potay
Primary advisor	McKinnon, Ronald
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	exchange rates
Subject	currency crises
Subject	monetary policy
Subject	Korea
Subject	Thailand
Subject	Argentina
Subject	Mexico
Genre	Thesis

Location	https://purl.stanford.edu/gr674nw4123

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Preferred Citation: Parapiboon, Potay. (2008). The Aftermath of Currency Crises: Exchange Rates, Money Growth, Inflation and Interest Rates in Asia and Latin America. Stanford Digital Repository. Available at: https://purl.stanford.edu/gr674nw4123

Stanford University, Department of Economics, Honors Theses

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