Fiscal Policy and the Predictability of Exchange Rate Collapse

Fiscal Policy and the Predictability of Exchange Rate Collapse
It is well known that the long-run viability of a fixed exchange rate regime imposes constraints on monetary policy. This paper shows that, in a model with forward-looking agents, short-run viability imposes a fiscal constraint. When policy change, which destroys long-run viability, also violates the fiscal constraint, collapse is instantaneous.... READ MORE...

Publication date: October 1997
ISBN 9781451855456
$15.00

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