Author(s)

Xiangqing Zou

Corresponding Author

Xiangqing Zou

Abstract

The Krugman-Flood-Garber model was based on the interest rate parity theory. The interest rate parity theory is based on the marketization of interest rate and full convertibility of currency, so the interest rate parity was not applicable to those countries that impose capital control. In this paper, considering variable system friction factors, we establish a new currency crisis model based on the Krugman-Flood-Garber model. The new model is more general. And then, we obtain the calculation equation of the collapse of fixed exchange rate time.

Keywords

Currency crisis, The Krugman- Flood- Garber model, System friction factors