International Capital Movements, Currency Crisis, and ICT Innovation

Abstract

This chapter investigates the effects generated by the currency crisis. The countries experienced the currency turmoil confronted financial crisis, economic deterioration, and increase of unemployment. This chapter empirically examines the effect of currency depreciation on the real GDP and the unemployment rates in those countries by employing the structural vector autoregressive model, which attempts to clarify whether identified supply or demand shocks can be caused by exchange rate depreciation. This study suggests currency crisis might generate demand shock, to result in harmful impacts to real economy in those countries. Those could be considered as negative effects of the ICT innovation.