search query: @indexterm DEVALUATION / total: 80
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| Author: | Kraay, A. |
| Title: | Do High Interest Rates Defend Currencies During Speculative Attacks? |
| Journal: | Journal of International Economics
2003 : MAR, VOL. 59:2, p. 297-322 |
| Index terms: | INTEREST RATES EXCHANGE RATES DEVALUATION SPECULATION |
| Language: | eng |
| Abstract: | The author examines links between high interest rates, speculative attacks and perverse effect of increasing the probability of a devaluation of the currency under attack. Drawing on evidence from a large sample of speculative attacks in developed and developing economies, this paper argues that the answer to both questions is 'no'. In particular, this paper documents a striking lack of any systematic association whatsoever 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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