Estonia, Latvia and Lithuania have succeeded in rapidly reducing their current account deficits despite fixed exchange rates. Which factors have played a major role in this? What similarities, and what differences, do the Baltic states show compared to Greece and Portugal? What insights can be...

This paper analyses the problem of "original sin" (the fact that the currency of an emerging market economy usually cannot be used to borrow abroad) in a simple thirdgeneration model of currency crises. The approach differs from alternative frameworks by explicitly modeling the price setting...

Institut für Halle Institute for Economic Research Wirtschaftsforschung Halle IWH-Diskussionspapiere IWH-Discussion Papers Original Sin Analysing Its Mechanics and a proposed Remedy in a Simple Macroeconomic Model Axel Lindner Juni 2006 ...