With the crises of the US economic, the Global economy is also affected. The global economy is in hard condition now. The major currency crises occur with considerable frequencies around the world. In the past, the government-controlled exchange rates caused crises in Mexico, Brazil and Southeast Asia, which have created worldwide attention to speculative attacks. Because these events carry enormous costs, researchers have found new theoretical and empirical work exploring the management of financial crises in emerging markets. It is said, “This NBER volume, a collection of papers that combine data and theory, provides an interesting and useful compendium of this recent research. It outlines very clearly the main issues that have to be addressed, and advances some suggestive evidence and new theoretical arguments in pursuit of its main goal—helping scholars and policymakers reduce the costs of financial crisis in emerging markets. The volume is divided into three parts, which can be seen as corresponding to the three phases that a country faces once it is hit by a crisis (a companion NBER volume edited by Sebastian Edwards and Jeffrey Frankel dealt with preventing currency crisis in emerging markets). The first part focuses on the initial policy response to defend the currency, the second part assesses the interventions of the International Monetary Fund (IMF), and the third examines the impact of both the crisis and the IMF “rescue packages” on the real economy.” (Managing Currency Cries in Emerging Market). In the report of Michael Dooley, the first two chapters examine the reaction of exchange rates to interest rate hikes after the onset of the crisis, a topic that gave rise to intense controversy during the recent East Asian crisis. Michael Dooley said in his report, “The chapter by Dongchul Cho and Kenneth West provides empirical evidence that increases in interest rates led to exchange rate appreciation in Korea and the Philippines but to depreciation in Thailand. While the authors identify several mechanisms that can explain this difference in outcomes, the second chapter in the book, by Allan Drazen, suggests an insightful new theoretical possibility. Drazen contends that an interest rate defense might succeed in appreciating the exchange rate if high interest rates are a signal of a government’s willingness to defend the exchange rate.” At times, however, this defense may not succeed because a strong interest rate defense may also signal a government’s inability to defend the exchange rate given low levels of reserves or weak fiscal positions.  Referencehttp://faculty.chicagobooth.edu/christian.broda/website/research/unrestr...