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Debt and Currency Crises — Complements or Substitutes?

Title data

Herz, Bernhard ; Tong, Hui:
Debt and Currency Crises — Complements or Substitutes?
In: Review of International Economics. Vol. 16 (2008) Issue 5 . - pp. 955-970.
ISSN 1467-9396
DOI: https://doi.org/10.1111/j.1467-9396.2008.00760.x

Abstract in another language

Debt and currency crises are closely interlinked through the government's intertemporal budget constraint. The default tax and the inflation/devaluation tax can be considered as alternative means of financing. Our empirical analysis finds that high-debt countries choose default rather than inflation/devaluation for financing, while a high money stock reduces the probability of debt crises. Further, we find strong evidence that debt and currency crises share common fundamental causes. Finally, there is a Granger causality running from debt crises to currency crises, but only weakly in the other direction.

Further data

Item Type: Article in a journal
Refereed: Yes
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics I > Chair Economics I - Univ.-Prof. Dr. Bernhard Herz
Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics I
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 02 Apr 2015 05:59
Last Modified: 02 Apr 2015 05:59
URI: https://eref.uni-bayreuth.de/id/eprint/9768