An Anatomy of Currency Crises

An Anatomy of Currency Crises

We investigate the hypothesis that currency crises are linked to a breakdown in a set of macroeconomic fundamentals, which sparks a speculative attack. A conditional logit model is estimated for 2 7 countries experiencing cries over the period 1980 to 1997. This sample includes countries from the Latin Americn. European and Asian Pacific regions. The results support the fundamentals hypothesis with characteristics such as domestic credit, international reserves, the real exchange rate, foreign currency ratings and the choice of the exchange rate reime impacting on the crisis probability. The differing impacts of particular characteristics throygh time and across regions ane emphasised.