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Government Finance in the Wake of Currency Crises

Craig Burnside (), Martin Eichenbaum () and Sergio Rebelo ()

No 3939, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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).

Keywords: bailouts; banking crisis; currency crisis; fiscal reform; seigniorage; speculative attacks (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Date: 2003-06
New Economics Papers: this item is included in nep-sea
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Journal Article: Government finance in the wake of currency crises (2006) Downloads
Working Paper: Government Finance in the Wake of Currency Crises (2005) Downloads
Working Paper: Government Finance in the Wake of Currency Crises (2003) Downloads
Working Paper: Government Finance in the Wake of Currency Crises (2003) Downloads
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