An alternative methodology for testing currency crises resulting from imbalances in macroeconomic fundamentals

This article analyses whether exchange rate pressures and speculative attacks against the Brazilian currency during the period of exchange rate anchorage resulted from imbalances in economic fundamentals. An alternative methodological approach is used to test whether the deterioration of economic fu...

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Bibliographic Details
Published in:	Applied financial economics Vol. 20; no. 13; pp. 1051 - 1056
Main Authors:	Ribeiro Soares, Fernando A., Pinto, Mauricio Barata de Paula, Moreira, Tito Belchior Silva
Format:	Journal Article
Language:	English
Published:	London Routledge 01-07-2010 Taylor and Francis Journals Routledge, Taylor & Francis Group
Series:	Applied Financial Economics
Subjects:	Brazil Economic crisis Economic fundamentals Economic models Exchange rates Fiscal theory Foreign exchange rates Macroeconomics Monetary economics Monetary policy Studies Trade Brazil
Online Access:	Get full text
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Summary:	This article analyses whether exchange rate pressures and speculative attacks against the Brazilian currency during the period of exchange rate anchorage resulted from imbalances in economic fundamentals. An alternative methodological approach is used to test whether the deterioration of economic fundamentals can explain the pressure put on the exchange rate during a period of crisis. The most innovative aspect of this approach lies in the development of a construct of fundamentals for the Brazilian economy that incorporates variables related to the external, fiscal and monetary sectors. The results show that macroeconomic imbalances contributed to the currency collapse that occurred in January of 1999.
Bibliography:	ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23
ISSN:	0960-3107 1466-4305
DOI:	10.1080/09603101003742531