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Prospective Deficits and the Asian Currency Crisis

Author

Listed:
  • Burnside, C.
  • Eichenbaum, M.
  • Rebelo, S.

Abstract

This paper argues that the recent Asian currency crisis was caused by large prospective deficits associated with implicit bail out guaranteed to guarantees to failing banking systems. We articulate this view using a simple dynamic general equilibrium model whose key feature is that a speculative attack is inevitable once the present value of future government deficit rises.

Suggested Citation

  • Burnside, C. & Eichenbaum, M. & Rebelo, S., 1998. "Prospective Deficits and the Asian Currency Crisis," RCER Working Papers 458, University of Rochester - Center for Economic Research (RCER).
    • Handle: RePEc:roc:rocher:458
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    More about this item

    Keywords

    EXCHANGE RATE ; CURRENCIES ; ASIA;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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