The Twin Crises: The Causes of Banking and Balance-of-Payments Problems.

The authors of this paper focus on the potential links between banking and balance-of-payments crisis. The balance-of-payments crisis has come to the attention of policy and academic discussions in light of the ERM and Mexican currency crises. The authors explore these episodes for a large number of countries. Knowing that there are banking problems helps predict a balance-of-payments crisis. Rather than a casual relationship from banking to balance-of-payments crises, the macroeconomic stylized facts that characterize these episodes indicate common causes. This working paper can be found at the US Federal Reserve Board's International Finance Discussion Papers. You can access this by going to <http://www.federalreserve.gov/pubs/workingpapers.htm>