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
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)
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)
Working Paper: Say you fix, enjoy and relax: the deleterious effect of peg announcements on fiscal discipline (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpif:0509001
Access Statistics for this paper
More papers in International Finance from EconWPA
Bibliographic data for series maintained by EconWPA ().