Seigniorage, Fiscal Constraints, and the Viability of a Fixed Exchange Rate

Betty Daniel ()

Discussion Papers from University at Albany, SUNY, Department of Economics

Abstract: Whenever unsustainable current government budget deficits predict future changes in monetary growth through the government's intertemporal budget constraint, fiscal variables become important exchange rate determinants. Failure to understand sustained rates of depreciation, seemingly unjustified by similar differentials in current fundamentals, or the liquidity effect of an open market operation may be due to failure to link future monetary growth to current policy. These ideas are presented using an intertemporal current account theory of the nominal exchange rate. The theory is supported by the mathematical equivalence of intertemporal current account balance and the absence of speculative bubbles in national money markets.

Keywords: Seignoirage; Exchange Rate (search for similar items in EconPapers)
JEL-codes: F30 F31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1997
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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: https://EconPapers.repec.org/RePEc:nya:albaec:97-05

Ordering information: This working paper can be ordered from
Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A.
http://www.albany.ed ... workingp/index.shtml

Access Statistics for this paper

More papers in Discussion Papers from University at Albany, SUNY, Department of Economics Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A..
Bibliographic data for series maintained by Byoung Park ().