Currency Crises and Government Finances
Fiscal policy plays a big role in currency crises - before, and after they occur. Thus policymakers should not underestimate the importance of fiscal policy: a) the realization of large contingent liabilities can quickly, and dramatically alter gov...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2002/05/2011711/currency-crises-government-finances http://hdl.handle.net/10986/11348 |
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okr-10986-113482021-06-14T10:58:21Z Currency Crises and Government Finances Burnside, Craig BANKING SYSTEMS BUDGET CONSTRAINT CENTRAL BANK CONTINGENT LIABILITIES CURRENCY DEBT = INTEREST DEVELOPMENT ECONOMICS DOMESTIC PRICE ECONOMIC OUTCOMES ECONOMISTS FISCAL FISCAL BALANCE FISCAL COST FISCAL COSTS FISCAL POLICIES FISCAL POLICY FISCAL REFORM FISCAL REFORMS FISCAL SUSTAINABILITY FIXED EXCHANGE RATE GDP GOVERNMENT ACTION GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT POLICIES GOVERNMENT REVENUE GROWTH RATE INFLATION INFLATION RATE INTEREST RATE INTERNATIONAL MONETARY FUND LOCAL CURRENCY MONETARY POLICIES MONETARY POLICY MONEY DEMAND PRESENT VALUE PRESIDENCY PUBLIC SECTOR REAL GROWTH REAL INTEREST RATE RESERVES SEIGNIORAGE WAGES CURRENCY REALIGNMENTS FISCAL POLICY FINANCIAL CRISES CONTINGENT LIABILITY GOVERNMENT FINANCIAL INSTITUTIONS REVENUE MEASURES PUBLIC SPENDING DEBT CRISIS INFLATIONARY PRESSURES CURRENCY DEVALUATION BANKING DISTRESS EMERGING ECONOMIES BANKING SYSTEMS Fiscal policy plays a big role in currency crises - before, and after they occur. Thus policymakers should not underestimate the importance of fiscal policy: a) the realization of large contingent liabilities can quickly, and dramatically alter government finances, leading to a currency crisis; b) the effects of a currency crisis on government finances depend on the structure of government revenue, spending, and debt; c) the fiscal policies adopted in response to a crisis, influence economic outcomes, especially inflation, and depreciation. The note reviews the traditional models of currency crises, explained as a consequence of unsustainable fiscal policy, and how debt is accumulated, how currency crisis then develops, and why does fiscal policy matter. Focusing on bank bailouts, it is argued that traditional models of currency crises are applicable to emerging markets, suggesting that deficits after the East Asia financial crises could have been anticipated given the region's deteriorating banking systems, but that economic outcomes largely depend on the mix of financing. 2012-08-13T14:49:34Z 2012-08-13T14:49:34Z 2002-05 http://documents.worldbank.org/curated/en/2002/05/2011711/currency-crises-government-finances http://hdl.handle.net/10986/11348 English PREM Notes; No. 68 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research East Asia and Pacific Korea, Republic of |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANKING SYSTEMS BUDGET CONSTRAINT CENTRAL BANK CONTINGENT LIABILITIES CURRENCY DEBT = INTEREST DEVELOPMENT ECONOMICS DOMESTIC PRICE ECONOMIC OUTCOMES ECONOMISTS FISCAL FISCAL BALANCE FISCAL COST FISCAL COSTS FISCAL POLICIES FISCAL POLICY FISCAL REFORM FISCAL REFORMS FISCAL SUSTAINABILITY FIXED EXCHANGE RATE GDP GOVERNMENT ACTION GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT POLICIES GOVERNMENT REVENUE GROWTH RATE INFLATION INFLATION RATE INTEREST RATE INTERNATIONAL MONETARY FUND LOCAL CURRENCY MONETARY POLICIES MONETARY POLICY MONEY DEMAND PRESENT VALUE PRESIDENCY PUBLIC SECTOR REAL GROWTH REAL INTEREST RATE RESERVES SEIGNIORAGE WAGES CURRENCY REALIGNMENTS FISCAL POLICY FINANCIAL CRISES CONTINGENT LIABILITY GOVERNMENT FINANCIAL INSTITUTIONS REVENUE MEASURES PUBLIC SPENDING DEBT CRISIS INFLATIONARY PRESSURES CURRENCY DEVALUATION BANKING DISTRESS EMERGING ECONOMIES BANKING SYSTEMS |
| spellingShingle |
BANKING SYSTEMS BUDGET CONSTRAINT CENTRAL BANK CONTINGENT LIABILITIES CURRENCY DEBT = INTEREST DEVELOPMENT ECONOMICS DOMESTIC PRICE ECONOMIC OUTCOMES ECONOMISTS FISCAL FISCAL BALANCE FISCAL COST FISCAL COSTS FISCAL POLICIES FISCAL POLICY FISCAL REFORM FISCAL REFORMS FISCAL SUSTAINABILITY FIXED EXCHANGE RATE GDP GOVERNMENT ACTION GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT POLICIES GOVERNMENT REVENUE GROWTH RATE INFLATION INFLATION RATE INTEREST RATE INTERNATIONAL MONETARY FUND LOCAL CURRENCY MONETARY POLICIES MONETARY POLICY MONEY DEMAND PRESENT VALUE PRESIDENCY PUBLIC SECTOR REAL GROWTH REAL INTEREST RATE RESERVES SEIGNIORAGE WAGES CURRENCY REALIGNMENTS FISCAL POLICY FINANCIAL CRISES CONTINGENT LIABILITY GOVERNMENT FINANCIAL INSTITUTIONS REVENUE MEASURES PUBLIC SPENDING DEBT CRISIS INFLATIONARY PRESSURES CURRENCY DEVALUATION BANKING DISTRESS EMERGING ECONOMIES BANKING SYSTEMS Burnside, Craig Currency Crises and Government Finances |
| geographic_facet |
East Asia and Pacific Korea, Republic of |
| relation |
PREM Notes; No. 68 |
| description |
Fiscal policy plays a big role in
currency crises - before, and after they occur. Thus
policymakers should not underestimate the importance of
fiscal policy: a) the realization of large contingent
liabilities can quickly, and dramatically alter government
finances, leading to a currency crisis; b) the effects of a
currency crisis on government finances depend on the
structure of government revenue, spending, and debt; c) the
fiscal policies adopted in response to a crisis, influence
economic outcomes, especially inflation, and depreciation.
The note reviews the traditional models of currency crises,
explained as a consequence of unsustainable fiscal policy,
and how debt is accumulated, how currency crisis then
develops, and why does fiscal policy matter. Focusing on
bank bailouts, it is argued that traditional models of
currency crises are applicable to emerging markets,
suggesting that deficits after the East Asia financial
crises could have been anticipated given the region's
deteriorating banking systems, but that economic outcomes
largely depend on the mix of financing. |
| format |
Publications & Research :: Brief |
| author |
Burnside, Craig |
| author_facet |
Burnside, Craig |
| author_sort |
Burnside, Craig |
| title |
Currency Crises and Government Finances |
| title_short |
Currency Crises and Government Finances |
| title_full |
Currency Crises and Government Finances |
| title_fullStr |
Currency Crises and Government Finances |
| title_full_unstemmed |
Currency Crises and Government Finances |
| title_sort |
currency crises and government finances |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2002/05/2011711/currency-crises-government-finances http://hdl.handle.net/10986/11348 |
| _version_ |
1764416414932795392 |