Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73377
Authors: 
Bauer, Christian
Herz, Bernhard
Karb, Volker
Year of Publication: 
2006
Series/Report no.: 
BGPE Discussion Paper 19
Abstract: 
In the literature on currency and banking crises it has become the standard procedure to distinguish pure currency crises, pure banking crises and combined (“twin”) currency and banking crises. We show theoretically and empirically that a similar differentiation should be chosen with regard to currency and debt crises. Twin currency and debt crises differ from both pure currency and pure debt crises in their determinants, course of events, and economic consequences. We find that each type of crises has a unique set of macroeconomic causes. We also identify internal contagion and selection bias effects, which may lead to biased empirical estimates if twin crises are not treated as a specific type of crises. Such a separation allows to significantly improve the efficiency of early warning systems especially for debt and twin crises.
Subjects: 
currency crises
debt crises
twin crises
emerging markets
JEL: 
F31
F33
F34
F41
Document Type: 
Working Paper

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