EconPapers    
Economics at your fingertips  
 

SAY YOU FIX, ENJOY AND RELAX THE DELETERIOUS EFFECT OF PEG ANNOUNCEMENTS ON FISCAL DISCIPLINE

Enrique Alberola (), Luis Molina Sánchez () and Daniel Navia ()

International Finance from EconWPA

Abstract: This paper explores the impact of actual exchange rate regimes on fiscal discipline, which we purportedly link to the effect of announcing the peg and to the availability of external funds. To stress this point, the focus of the analysis is emerging markets spanning from the beginning of the nineties, given the importance of financial integration in the last fifteen years and the centrality of external financing for these countries. We empirically show that announcing the pegs has deleterious effects on fiscal discipline, while ‘de facto’ pegs which have not been announced deliver superior fiscal outcomes. The evidence suggests that this is due to the initial positive credibility shock of the announcement, which allows for easier and less costly access to the financing of fiscal deficits in emerging countries.

Keywords: exchange rate regimes; fiscal discipline (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2005-09-01
Note: Type of Document - pdf; pages: 38
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
http://econwpa.repec.org/eps/if/papers/0509/0509001.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: Say you fix, enjoy and relax: the deleterious effect of peg announcements on fiscal discipline (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpif:0509001

Access Statistics for this paper

More papers in International Finance from EconWPA
Series data maintained by EconWPA ().

 
Page updated 2017-06-25
Handle: RePEc:wpa:wuwpif:0509001