Do High Interest Rates Defend Currencies during Speculative Attacks?

Drawing on evidence from a large sample of speculative attacks in industrial and developing countries, the author argues that high interest rates do not defend currencies against speculative attacks. In fact, there is a striking lack of any systema...

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Bibliographic Details
Main Author:	Kraay, Aart
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ADVERSE EFFECTS BANKING CRISIS BENCHMARK BLACK MARKET BLACK MARKET PREMIUM BORROWING COSTS BUSINESS CYCLE CAPITAL LOSSES CAPITAL MOBILITY CAPITAL MOVEMENTS CENTRAL BANK CURRENCY CRISES DEPOSIT MONEY DEPOSIT MONEY BANKS DEVALUATION DEVELOPING COUNTRIES DISCOUNT RATE DOMESTIC CREDIT DOMESTIC CURRENCY DOMESTIC ECONOMY DOMESTIC INTEREST RATES ECONOMIC ACTIVITY EMPIRICAL EVIDENCE EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXPECTED RETURN FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL MARKETS FIXED EXCHANGE RATE FIXED EXCHANGE RATES FIXED NOMINAL EXCHANGE RATES FOREIGN CURRENCY FOREIGN EXCHANGE FREE CAPITAL MOBILITY FREQUENCY DISTRIBUTION GDP GROWTH RATE GROWTH RATES HIGH INFLATION HIGH INTEREST RATES INCOME COUNTRIES INFLATION RATES INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL MONETARY FUND LOCAL CURRENCY MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL COST MEDIAN VALUE MONETARY AUTHORITIES MONETARY AUTHORITY MONETARY POLICY MONEY MARKET NOMINAL EXCHANGE RATE NOMINAL INTEREST RATE OPEN MARKET OPERATIONS OPTIMIZATION OVERVALUATION POLICY RESEARCH POSITIVE EFFECTS REAL EXCHANGE REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATES RESERVE REQUIREMENTS RESERVES RISK AVERSE STANDARD DEVIATION TIGHT MONETARY POLICY
Online Access:	http://documents.worldbank.org/curated/en/2000/01/439015/high-interest-rates-defend-currencies-during-speculative-attacks http://hdl.handle.net/10986/19853

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http://documents.worldbank.org/curated/en/2000/01/439015/high-interest-rates-defend-currencies-during-speculative-attacks
http://hdl.handle.net/10986/19853

Do High Interest Rates Defend Currencies during Speculative Attacks?

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