Empirical Links between Twin Crises in the 1980s and the 1990s: Were there Differences?

  • Jürgen von Hagen
  • Tai-kuang Ho


This article examines the empirics of twin crises for a sample of 33 developing countries. We use the same methodology to identify currency and banking crises. We find that twin crises in the 1980s tended to show up as a currency crisis followed by a banking crisis. This pattern changes in the 1990s with twin crises showing up as a banking crisis followed by a currency crisis. Currency crises in the 1990s are strongly correlated with high M2 to foreign reserves ratio. Banking crises in the 1990s are more likely associated with a boom and bust cycle in credit growth.


Real Exchange Rate Nominal Interest Rate Currency Crisis Banking Crisis Foreign Reserve 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Jürgen von Hagen
    • 1
  • Tai-kuang Ho
    • 2
  1. 1.Center for European Integration Studies (ZEI B)BonnGermany
  2. 2.Graduate Institute of International EconomicsNational Chung Cheng UniversityTaiwan

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