NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Government Finance in the Wake of Currency Crises

Craig Burnside, Martin Eichenbaum, Sergio Rebelo

NBER Working Paper No. 9786
Issued in June 2003
NBER Program(s):   EFG   IFM   ME   PE

This paper addresses two questions: (i) how do governments actually pay for the fiscal costs associated with currency crises; and (ii) what are the implications of different financing methods for post-crisis rates of inflation and depreciation? We study these questions using a general equilibrium model in which a currency crisis is triggered by prospective government deficits. We then use our model in conjunction with fiscal data to interpret government financing in the wake of three recent currency crises: Korea (1997), Mexico (1994) and Turkey (2001).

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Document Object Identifier (DOI): 10.3386/w9786

Published: Burnside, Craig, Martin Eichenbaum and Sergio Rebelo. "Government Finance In The Wake Of Currency Crises," Journal of Monetary Economics, 2006, v53(3,Apr), 401-440.

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