Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98337
Authors: 
Corsetti, Giancarlo
Mackowiak, Bartosz
Year of Publication: 
2000
Series/Report no.: 
Center Discussion Paper 820
Abstract: 
We study the interaction of fiscal and monetary policies during a currency crisis in an economy with government nominal liabilities. We show that the stock and maturity of these liabilities are key determinants of the magnitude, timing and predictability of a devaluation. Among notable features of our model, monetary authorities defend the currency parity conditional on the level of the interest rate, rather than on the stock of international reserves; budget deficits need not be high before a currency crisis; post- devaluation inflation may exhibit little persistence, and money demand need not fall after the crisis.
JEL: 
F31
F33
E58
Document Type: 
Working Paper

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