A currency crisis is defined as a speculative attack on
the foreign exchange value of a currency, resulting in a
sharp depreciation or forcing the authorities to sell for-
eign exchange reserves and raise domestic interest rates
to defend the currency. Currency crises are highly corre-
lated with ‘sudden stops,’ that is, a sharp reversal in cap-
ital flows. ‘Models of Currency Crises’ by Glick and
Hutchinson discusses analytical models of the causes
of currency (and associated) crises, presents basic mea-
sures of the incidence of crises, evaluates the accuracy
of empirical models in predicting them, and reviews
work measuring the consequences of crises on the real
economy.
One of