Economic integration and the exchange rate regime: how damaging are currency crises? : [This Version: October 2003]

  • We use consumer price data for 205 cities/regions in 21 countries to study PPP deviations before, during and after the major currency crises of the 1990s. We combine data from industrialized nations in North America (Unites States, Canada and Mexico), Europe (Germany, Italy, Spain and Portugal), Asia (Japan and South Korea), and Oceania (Australia and New Zealand) with corresponding data from emerging market economies in South America (Argentina, Bolivia, Brazil, Columbia) and Asia (India, Indonesia, Malaysia, Philippines, Taiwan, Thailand). By doing so, we confirm previous results that both distance and border explain a significant amount of relative price variation across different locations. We also find that currency attacks had major disintegration effects by considerably increasing these border effects and by raising within-country relative price dispersion in emerging market economies. These effects are found to be quite persistent since relative price volatility across emerging markets today is still significantly larger than a decade ago.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:Axel A. Weber, Günter W. Beck
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2001,13 - revised
Series (Serial Number):CFS working paper series (2001, 13)
Document Type:Working Paper
Year of Completion:2003
Year of first Publication:2003
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:contagion; currency crisis; law of one price; purchasing power parity; real exchange rate volatility; relative price volatility; spatial data
GND Keyword:Verbraucherpreis; Währungskrise
Issue:This Version: October 2003
Page Number:77
This Version: October 2003 First Version: November 2001
Source:CFS working paper ; 2001,13 revised
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht