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http://hdl.handle.net/10419/19270
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| Title: | | Default, Electoral Uncertainty and the Choice of Exchange Regime  |
| Authors: | | Hefeker, Carsten |
| Issue Date: | | 2004 |
| Series/Report no.: | | HWWA Discussion Paper 298 |
| Abstract: | | The paper explores the interaction between debt crises and devaluation. Since the optimal level of devaluation in a crisis depends on the level of debt that has to be serviced, a default makes a devaluation less likely. Expected devaluation depends thus on expectations about default which is also a function of the type of policymaker. Therefore, the decision to devalue can be forced upon the government by adverse expectations about default and the type of policymaker in office. I also explore how these uncertainties affect the policymaker?s choice of exchange rate regime. |
| Subjects: | | debt crisis currency crisis exchange rate regime |
| JEL: | | F34 F33 |
| Document Type: | | Working Paper |
| Appears in Collections: | | HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv
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