lecture 2-21-08

lecture 2-21-08 - -Expected high unemployment-Confidence is...

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Cassie Morgan Lecture 2-21-08 Currency Crisis Factors: - trade deficit o import v. export growth o GDP growth - inflation - pegged vs. floating - high unemployment - political instability - interest rates o they were very high before the crash 80% - bonds o borrowing o TESO bonds - Industry diversification - Loss of confidence - Foreign investment o FDI - Government regulation o Fiscal deficit How much the country itself is in debt Different Countries: Country A: United Kingdom in 1992 had currency crisis - In the European Union o Common currency of the Euro o less - OECD member o less - Dependent on manufacturing o more - Industrialized o less - Recession o more - Deficit o Small o recent - high interest rates - fiscal account deficit - exchange rates
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o some change, but not much Country B: Argentina (1989-1994 info led to crisis in 2002) - Moved from pegged to floating - Large GDP growth o 40% may be too positive - Have 8.6 months of currency reserves - Government regulation moved from closed to open
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Unformatted text preview: -Expected high unemployment--Confidence is low o People are predicting that there is gong to be a problem-Speculation in neighboring countries (Mexico) o Contagion the communication of disease from one person to another by close contact Country C: Philippines (1997) had currency crisis-Developing-Diverse economy-Large trade deficit-Peg to the dollar-Government is liberalizing-Budget surplus-High poverty rate-FDI o Starts high then crashes-Government reform-Foreign currency reserves are okay Country D: South Korea (1997) had currency crisis-Growth -Foreign borrowing -Increased liberalization-Government surplus soon changed to a deficit-Debt increase o Borrowing and speculation Country E: Poland-Join OECD-Inflation-Major economic transition seven years ago-Liberalization-Recession -FDI increase...
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lecture 2-21-08 - -Expected high unemployment-Confidence is...

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