PUBLIC DEBT MATURITY AND CURRENCY CRISES

Debt and Currency Crises—Complements or Substitutes?*

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. Furt...

External and Public Debt Crises: Discussion

The Long and the Short of It: Sovereign Debt Crises and Debt Maturity

We present a simple model of sovereign debt crises in which a country chooses its optimal mix of short and long-term debt contracts subject to standard contracting frictions: the country cannot commit to repay its debts nor to a speci…c path of future debt issues, and contracts cannot be made state contingent nor renegotiated. We show that in order to satisfy incentive compatibility the country...

Corporate Currency Hedging and Currency Crises

We examine the impact of corporate currency hedging on economic stability by introducing hedging activity in a Mundell-Fleming-Tobin framework for analyzing currency and financial crises. The ratio between hedged and unhedged firms is modelled depending on firm size as well as hedging costs. The results indicate that, with an increasing fraction of hedged firms in an economy, the magnitude of a...

Simultaneous Occurrence of Banking Debt and Currency Crises (Triple Crises) in Iranian Economy and Its Determining Factors During the Period 1980-2017

In monetary and financial literature, financial crises include a wide range of crises. But in general, there are three important types of financial crisis, including the currency crisis. The banking crisis and the debt crisis. The aim of this study is to simultaneously analyze the occurrence of banking, debt and currency crises, known as the three crises in Iran. For this purpose, first to dete...