@techreport{NBERw5300,
 title = "Money-Based versus Exchange Rate-Based Stabilization with Endogenous Fiscal Policy",
 author = "Aaron Tornell and Andres Velasco",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "5300",
 year = "1995",
 month = "October",
 URL = "http://www.nber.org/papers/w5300",
 abstract = {We present a standard intertemporal model in which fiscal policy is determined by an optimizing but non-benevolent fiscal authority. If the fiscal authority is impatient, a money-based stabilization provides more fiscal discipline and higher welfare for the representative agent than does an exchange rate-based stabilization. Data for Latin American stabilizations in the last quarter-century seem to confirm the notion that stabilizing by using money rather than the exchange rate helps induce politicians to reduce the fiscal deficit.},
}