Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19270
Authors: 
Hefeker, Carsten
Year of Publication: 
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

Files in This Item:
File
Size
167.52 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.