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Proceedings of the German Development Economics Conference, 2007 (Göttingen) >
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http://hdl.handle.net/10419/19869
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| Title: | | Default, Electoral Uncertainty and the Choice of Exchange Regime  |
| Authors: | | Hefeker, Carsten |
| Issue Date: | | 2007 |
| Series/Report no.: | | Proceedings of the German Development Economics Conference, Göttingen 2007 / Verein für Socialpolitik, Research Committee Development Economics 13 |
| 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: | | F33 F34 |
| Appears in Collections: | | Proceedings of the German Development Economics Conference, 2007 (Göttingen)
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