Budget Deficits and Exchange-Rate Crises

This paper investigates currency crises in an optimizing general equilibrium model with overlapping generations. It is shown that a rise in government budget deficits financed by future taxes generates a decumulation of external assets, leading up to a speculative attack and forcing the monetary authorities to abandon the peg.

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Year of publication:	2011
Authors:	Annicchiarico, Barbara ; Marini, Giancarlo ; Piersanti, Giovanni
Published in:	International Economic Journal. - Taylor & Francis Journals, ISSN 1016-8737. - Vol. 25.2011, 2, p. 285-303
Publisher:	Taylor & Francis Journals
Subject:	Budget deficits \| foreign exchange reserves \| currency crises

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009223942