This paper analyzes the trade-off between official liquidity provision and debtor moral hazard ininternational financial crises. In the model, crises are caused by the interaction of bad fundamentals,self-fulfilling runs and policies by three classes of optimizing agents: international...

We present a stylized framework which encompasses a variety of balance sheet approaches to currency crises that have been suggested in the literature, and analyze their policy implications. The common theme is that currency and maturity mismatches in private sector balance sheets constrain the...