Inhaltszusammenfassung

Empirically, currency crises are more frequently accompanied by sovereign debt crises than by banking crises. Nevertheless twin currency and debt crises have so far been neglected in the literature. We analyze the optimal policy of a government to keep or exit an exchange rate peg and to default or not to default on its debt. Both a devaluation and a default can be used to "finance" public expenditure. This can generate situations with self-fulfilling expectations. Moreover, a crisis in the s...Empirically, currency crises are more frequently accompanied by sovereign debt crises than by banking crises. Nevertheless twin currency and debt crises have so far been neglected in the literature. We analyze the optimal policy of a government to keep or exit an exchange rate peg and to default or not to default on its debt. Both a devaluation and a default can be used to "finance" public expenditure. This can generate situations with self-fulfilling expectations. Moreover, a crisis in the sovereign debt market can spread to the exchange market and cause a devaluation (internal contagion). » weiterlesen» einklappen

Autoren

Klassifikation

DFG Fachgebiet:
Wirtschaftswissenschaften

DDC Sachgruppe:
Wirtschaft