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Contagion, and Financial Liberalization *

By  and Masazumi Hattori and Masazumi Hattori

Abstract

This paper contains an empirical analysis of the "depth " of the Mexican Currency Crisis (1994-1995) and the East Asian Currency Crisis (1997). The purpose is to attempt to gauge the degree of impact of 1) deterioration in economic fundamentals and 2) the function of contagion channels on the above two crises. Below is a summary of the main conclusions reached from this empirical analysis. 1) The significance of economic statistics hitherto emphasized as important in currency crisis theory to explain the depth of a currency crisis differs from crisis to crisis. Just because a certain economic statistic has a high degree of explanatory power for one crisis does not necessarily mean that it will be significant to explain another. 2) The hypothesis that "deterioration in fundamentals will exacerbate the depth of currency crisis only in those cases in which fundamentals are extremely poor and, at the same time, there is a high likelihood of liquidity drying up " can not be accepted for the East Asian Currency Crisis sample, but can be for the Mexican Currenc

Topics: Japan) and Kazunari Ohashi (IMF). All remaining mistakes are attributable entirely to th
Year: 2002
OAI identifier: oai:CiteSeerX.psu:10.1.1.196.1070
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