Prospective deficits and the Asian currency crisis

Author / Creator

Burnside, Craig

Available as

Online

Summary

The recent Asian currency crisis was caused by large prospective fiscal deficits associated with implicit bailout guarantees to failing banking systems. Absent the political will to raise taxes or ...

The recent Asian currency crisis was caused by large prospective fiscal deficits associated with implicit bailout guarantees to failing banking systems. Absent the political will to raise taxes or cut spending, governments must resort to seignorage revenues to pay for the bailout of the banking system. In a world of forward-looking agents, this makes a currency crisis inevitable.

Show More