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Do high interest rates defend currencies during speculative attacks ?, Volume 1
Author:Kraay, Aart; Date Stored:2000/02/09
Document Date:2000/01/31Document Type:Policy Research Working Paper
SubTopics:Payment Systems & Infrastructure; Environmental Economics & Policies; Fiscal & Monetary Policy; Economic Stabilization; Macroeconomic Management; Economic Theory & Research; Financial Economics; Insurance & Risk MitigationLanguage:English
Major Sector:Financial SectorReport Number:WPS2267
Sub Sectors:Other FinanceCollection Title:Policy, Research working paper ; no. WPS 2267
Volume No:1  

Summary: 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.

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