Politically generated uncertainty and currency crises: Theory, tests, and forecasts

David Leblang, Shanker Satyanath

    Research output: Contribution to journalArticlepeer-review


    While it is widely acknowledged that political factors contribute to currency crises there have been few efforts at using political variables to improve crisis forecasts. We discuss ways in which political factors can be incorporated into theoretical models of crises, and develop testable hypotheses relating variations in political variables to variations in the probability of a currency crisis. We show that the incorporation of political variables into diverse crisis models substantially improves their out-of-sample predictive performance.

    Original languageEnglish (US)
    Pages (from-to)480-497
    Number of pages18
    JournalJournal of International Money and Finance
    Issue number3
    StatePublished - Apr 2008


    • Currency crises
    • Forecasts
    • International economics
    • Political economy

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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