The Exchange Rate Regime and the Appearance of Currency Crises in Venezuela

Abstract

The main aim of this paper is the analysis of the different exchange rate regimes that have been adopted by Venezuela since the second half of the 20th century, to observe under what type of exchange rate regime has any balance of payments crisis been produced and which have been the causes that motivated the appearance of such crisis. In order to fulfil such aims, first there is a description of what a currency crisis is and an exposition of the different types of models that explain the appearance of a currency crisis. Then there has been elaborated a revision of the different exchange rate models that Venezuela has adopted throughout the studied period, there is also an attempt to explaining the evolution of the economy on each exchange rate regimen by means of the study of some macroeconomic variables (inflation, GDP, current account and fiscal gap) as well as the influence of these macroeconomic variables on the modification of the exchange rate regime.