Government finance in the wake of currency crises
Abstract
We address three questions: (i) Can classical models be reconciled with the fact that
many crises are marked by high rates of depreciation and small increases in seignorage
revenue? (ii) What are the implications of different financing methods for post-crisis
rates of inflation and depreciation? (iii) How do governments pay for the fiscal costs
associated with currency crises? To study these questions we use a general equilibrium
model in which prospective government deficits trigger a currency crisis. We then
use our model in conjunction with fiscal data to interpret government financing in
the wake of three recent currency crises: Korea (1997), Mexico (1994) and Turkey (2001).
© 2006 Elsevier B.V. All rights reserved.
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https://hdl.handle.net/10161/2078Published Version (Please cite this version)
10.1016/j.jmoneco.2005.03.012Publication Info
Burnside, C; Eichenbaum, M; & Rebelo, S (2006). Government finance in the wake of currency crises. Journal of Monetary Economics, 53(3). pp. 401-440. 10.1016/j.jmoneco.2005.03.012. Retrieved from https://hdl.handle.net/10161/2078.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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