Does It Pay to Defend against a Speculative Attack?

Edited by Barry Eichengreen and Andrew K. Rose

in Managing Currency Crises in Emerging Markets

Published by University of Chicago Press

Published in print February 2003 | ISBN: 9780226155401
Published online February 2013 | e-ISBN: 9780226155425 | DOI:
Does It Pay to Defend against a Speculative Attack?

Show Summary Details


This chapter compares the behavior of failed and successful defenses of pegged exchange rates. It shows that the costs of unsuccessful defense against an attack on a currency system are large, about one year of economic growth or three percent of gross national product. The analysis also reveals that the difference in output losses between successful and unsuccessful defense is only significant for just one year. This finding can help account for a number of observations about the behavior of open economies and their policy makers.

Keywords: pegged exchange rates; economic growth; gross national product; output losses; open economies

Chapter.  9972 words.  Illustrated.

Subjects: International Economics

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.