Exchange Rate Crises: Experience of India, East Asia and Latin America
Abstract: A number of developing countries, mainly in East Asia and Latin America, suffered exchange rate crises in the 1990s. India also suffered a crisis in 1991. Earlier it had suffered a crisis in 1966. We examine the run up to the crisis in terms of a few macro indicators suggested by various crisis models. We then examine the aftermath of the crisis. We seek to explain the pre-crisis and post-crisis situation in the light of various crisis models. We find that crises in East Asia cannot be explained in terms of Krugman’s first generation model, but those in the other countries can be explained by Krugman’s model.Even so, there are a number of anomalies that cannot be explained by first generation models.