Citation
Discussion Paper Details
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Full Details
Title: Government Finance in the Wake of Currency Crises
Author(s): Craig Burnside, Martin Eichenbaum and Sérgio Rebelo
Publication Date: June 2003
Keyword(s): bailouts, banking crisis, currency crisis, fiscal reform, seigniorage and speculative attacks
Programme Area(s): International Macroeconomics
Abstract: This Paper addresses two questions: (i) how do governments actually pay for the fiscal costs associated with currency crises; and (ii) what are the implications of different financing methods for post-crisis rates of inflation and depreciation? We study these questions using a general equilibrium model in which a currency crisis is triggered by prospective government deficits. 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).
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Bibliographic Reference
Burnside, C, Eichenbaum, M and Rebelo, S. 2003. 'Government Finance in the Wake of Currency Crises'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3939