3 DIW Economic Bulletin 1.2013 With the crisis in the euro area, the issue of the institutional structure of the monetary union has gained in significance. One problem with regard to the longer-term stability of the euro area is the absence of mechanisms to adequately absorb asymmetric cyclical shocks in the individual member states. Such an instrument is essential in order to be able to implem...

Hedging is no longer an option for multinational corporations, especially during global financial crisis. This was clearly manifested in companies’ comprehensive income statement as in WalMart’s case that “During fiscal 2009, foreign currency exchange rate had a $2.3 billion unfavorable impact on the international segment’s net sales” and the company just lost $680 million in the second quarter...

The contagion aspect of the currency crisis is an important research issue today. In this paper, we set up a dynamic differential model of currency crisis cross contagions between two countries by expanding generalized logistics model, and analyze all kinds of possible equilibrium conditions. It is probably a new idea of studying currency crisis contagion mechanism.

Most analyses of the East Asian financial crisis have focused on its causes and the links between currency and banking crises. However a related question is what happens in the aftermath of a crisis? What factors determine the path of an economy in the post-devaluation phase? Does it swiftly bounce back, with the crisis being followed by a period of economic recovery, or does it face a period o...

It is perhaps too glib to record that the 1997–1998 financial crisis represented a watershed for the economies of east Asia. But it is certainly clear that many of the economic policies in the region, which had been viewed in a favourable light in the long years of spectacular economic growth, were reassessed in the light of the crisis. A critical part of this reassessment involved monetary pol...

This survey discusses theoretical models of speculative attack and currency crises, and reviews the empirical evidence. The paper outlines the correspondence of the models to different cases of crisis (e.g. Latin American crises, the ERM breakdown, and the recent Asian crisis), and points to gaps in the theoretical literature for explaining the Asian crisis. The large economic costs resulting f...

As the July presidential election nears, analysts and investors are growing more vocal about whether Mexico might once again be rocked by a major economic crisis, as has been the case at the close of each six-year presidential term since 1976. According to Goldman Sachs, the probability of Mexico facing a currency crisis in the near future has increased by one-third during the past two months. ...

Recently, a new resolve for both increased economic integration and monetary and exchange rate cooperation has started to emerge in ASEAN, especially since the 19971998 Asian financial crisis. According to the optimum currency area theory, the degree of trade integration is one most important criterion for joining a currency union. The large increase in intra-ASEAN trade in recent years natural...