Recovery from Currency Crises

This paper studies the recovery process after currency crises in 105 developing countries between 1975 and 1996. It examines which factors help us explain output growth after the crisis based on a fixed effects panel regression model. We find openness, investment before crisis, US interest rate, G7 country growth rate, exports, fiscal policy, and political stability are important factors for the recovery. Short-term debt, banking crisis, and monetary policy are significant in some estimation, but not as robust as the other variables. The estimation results are used to explain the recovery process in recent Asian crisis.