Crisis devaluations

Still thinking about a euro-area breakup. The question for this project is: For a given current account deficit and prior real appreciation, how big is the devaluation?

The dataset contain 36 devaluation episodes, all of which featured a minimum 15% nominal depreciation over six months less-than-fully offset by inflation (i.e. a real depreciation). They are all pre-2008 so do not include the flight-to-liquidity event associated with the Lehman Brothers collapse. 

These events struck developed as well as developing economies; the 1990s capital-account crises are all there. As it happens, real per capita GDP (log terms) makes no difference to the results. 

In the language of econometrics, what I’m doing is estimating the following equation: 

devaluation = constant + real appreciation + ca deficit + per-capita GDP in constant PPP dollars

where all terms are logs or log-change except ca deficit, which is in percent. 

Here are the descriptive statistics for the variables:

nominal
depreciation
prior real
appreciation
prior
ca deficit
gdp per cap
(2005 PPP$)
mean0.370.21-2.8813,696
sd0.280.273.329,815
min0.160.00-9.73793
max1.301.523.9734,233
N36.0036.0036.0036.00




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