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

id	okr-10986-19853
recordtype	oai_dc
spelling	okr-10986-198532021-04-23T14:03:47Z Do High Interest Rates Defend Currencies during Speculative Attacks? Kraay, Aart 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 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 systematic association between interest rates and the outcome of speculative attacks. The lack of clear empirical evidence on the effects of high interest rates during speculative attacks mirrors the theoretical ambiguities on this issue. 2014-08-28T19:40:33Z 2014-08-28T19:40:33Z 2000-01 http://documents.worldbank.org/curated/en/2000/01/439015/high-interest-rates-defend-currencies-during-speculative-attacks http://hdl.handle.net/10986/19853 English en_US Policy Research Working Paper;No. 2267 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	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
spellingShingle	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 Kraay, Aart Do High Interest Rates Defend Currencies during Speculative Attacks?
relation	Policy Research Working Paper;No. 2267
description	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 systematic association between interest rates and the outcome of speculative attacks. The lack of clear empirical evidence on the effects of high interest rates during speculative attacks mirrors the theoretical ambiguities on this issue.
format	Publications & Research :: Policy Research Working Paper
author	Kraay, Aart
author_facet	Kraay, Aart
author_sort	Kraay, Aart
title	Do High Interest Rates Defend Currencies during Speculative Attacks?
title_short	Do High Interest Rates Defend Currencies during Speculative Attacks?
title_full	Do High Interest Rates Defend Currencies during Speculative Attacks?
title_fullStr	Do High Interest Rates Defend Currencies during Speculative Attacks?
title_full_unstemmed	Do High Interest Rates Defend Currencies during Speculative Attacks?
title_sort	do high interest rates defend currencies during speculative attacks?
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2000/01/439015/high-interest-rates-defend-currencies-during-speculative-attacks http://hdl.handle.net/10986/19853
_version_	1764441834855071744

Do High Interest Rates Defend Currencies during Speculative Attacks?

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