Institutions, expectations, and currency crises

David Leblang, Shanker Satyanath

    Research output: Contribution to journalArticle

    Abstract

    Currency crises are costly phenomena that have been exceptionally difficult to explain and predict. We comprehensively examine the relationship between political institutions and currency crises and emphasize the causal linkage between institutions, expectations, and crises. Specifically, we argue that institutional variables - particularly divided government and government turnover - increase the variance of expectations held by speculators thereby increasing the likelihood of currency crises. We test these hypotheses using three existing economic models of currency crises and find that institutional variables are not only statistically significant, but also substantially improve the ability of these models to forecast crises.

    Original languageEnglish (US)
    Pages (from-to)245-262
    Number of pages18
    JournalInternational Organization
    Volume60
    Issue number1
    DOIs
    StatePublished - Jan 2006

    Fingerprint

    currency
    economic model
    political institution
    turnover
    Currency crises
    ability
    Institutional variables

    ASJC Scopus subject areas

    • Political Science and International Relations
    • Sociology and Political Science
    • Organizational Behavior and Human Resource Management

    Cite this

    Institutions, expectations, and currency crises. / Leblang, David; Satyanath, Shanker.

    In: International Organization, Vol. 60, No. 1, 01.2006, p. 245-262.

    Research output: Contribution to journalArticle

    Leblang, David ; Satyanath, Shanker. / Institutions, expectations, and currency crises. In: International Organization. 2006 ; Vol. 60, No. 1. pp. 245-262.
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