Article in Journal
How Fast Does an Economy Recover after a Currency and Government Debt Crisis?
Isabel Hanisch, Klaus Wohlrabe, Timo Wollmershäuser
ifo Institut, München, 2015
ifo Schnelldienst, 2015, 68, Nr. 13, 56-57
ifo Institut, München, 2015
ifo Schnelldienst, 2015, 68, Nr. 13, 56-57
In 2012 the Ifo Institute published a study showing that states that go through a strong currency devaluation start to recover as quickly as two years after the currency crisis and post above-average growth rates. This article expands that study of state debt crises. One of its key results is that haircuts only produce a sustainable economic recovery if accompanied by a sharp external devaluation.
JEL Classification: G010, N200