This paper investigates currency crises in an optimizing general equilibrium model with overlapping generations. It is shown that a rise in government budget deficits financed by future taxes generates a decumulation of external assets, leading up to a speculative attack and forcing the monetary authorities to abandon the peg.
Annicchiarico, B., Marini, G., Piersanti, G. (2011). Budget deficits and exchange-rate crises. INTERNATIONAL ECONOMIC JOURNAL, 25(2), 285-303 [10.1080/10168737.2010.504779].
Budget deficits and exchange-rate crises
ANNICCHIARICO, BARBARA;MARINI, GIANCARLO;
2011-01-01
Abstract
This paper investigates currency crises in an optimizing general equilibrium model with overlapping generations. It is shown that a rise in government budget deficits financed by future taxes generates a decumulation of external assets, leading up to a speculative attack and forcing the monetary authorities to abandon the peg.File in questo prodotto:
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