This paper, titled "Currency Crashes in Emerging Markets: An Empirical Treatment," by Jeffrey A. Frankel and Andrew K. Rose, examines currency crashes in over 100 developing countries from 1971 to 1992. The authors define a currency crash as a significant depreciation of the nominal exchange rate, accompanied by an increased rate of depreciation. They analyze various factors related to the composition of debt, macroeconomic conditions, external factors, and foreign variables. Key findings include: 1. **Debt Composition**: Countries with a high proportion of debt lent by commercial banks, short-term debt, and variable-rate debt are more prone to currency crashes. 2. **Foreign Variables**: High foreign interest rates and low Northern (developed country) growth are significant predictors of currency crashes. 3. **Macroeconomic Indicators**: High domestic credit growth and low output growth are associated with increased likelihood of a crash. 4. **Current Account and Budget Deficits**: These factors do not appear to play a significant role in currency crashes. The authors use both graphical and statistical methods to analyze the data, finding that currency crashes can be characterized by specific patterns in these variables. They conclude that currency crashes are predictable based on these characteristics and suggest that further research is needed to understand the underlying mechanisms.This paper, titled "Currency Crashes in Emerging Markets: An Empirical Treatment," by Jeffrey A. Frankel and Andrew K. Rose, examines currency crashes in over 100 developing countries from 1971 to 1992. The authors define a currency crash as a significant depreciation of the nominal exchange rate, accompanied by an increased rate of depreciation. They analyze various factors related to the composition of debt, macroeconomic conditions, external factors, and foreign variables. Key findings include: 1. **Debt Composition**: Countries with a high proportion of debt lent by commercial banks, short-term debt, and variable-rate debt are more prone to currency crashes. 2. **Foreign Variables**: High foreign interest rates and low Northern (developed country) growth are significant predictors of currency crashes. 3. **Macroeconomic Indicators**: High domestic credit growth and low output growth are associated with increased likelihood of a crash. 4. **Current Account and Budget Deficits**: These factors do not appear to play a significant role in currency crashes. The authors use both graphical and statistical methods to analyze the data, finding that currency crashes can be characterized by specific patterns in these variables. They conclude that currency crashes are predictable based on these characteristics and suggest that further research is needed to understand the underlying mechanisms.