Abstract

ERTURK, Korkut. Reflections on Currency Crises. Inv. Econ [online]. 2004, vol.63, n.248, pp.15-39. ISSN 0185-1667.

Currency crises, which have increasingly become a common occurrence around the world in the 1990s, can be analyzed at three different levels. Looking at it at the national level, these crises can be seen to signify the pitfalls of betting on financial liberalization to attract foreign capital on a massive scale, where financial imbalances caused by excessive debt, in this or that form, lead to an implosion. Looked at the level of the international monetary system, many of these crises are caused by a new breed of speculative attacks that have beleaguered global financial markets in recent times where expectations tend to become self-fulfilling prophecies. Finally, these crises can also be looked at the level of the structure of international trade and the world economy, where many developing countries today face, arguably, the threat of ‘immiserizing growth’ reflecting the fallacy of composition problem inherent in a generalized strategy of export-led growth.

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