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| Krawczyk, Mariusz K.. |
| The politically and legally complicated character of the EU Eastern Enlargement heavily influenced the conflict between the legal and economic rationality underlying the construction of the EMR-II. This makes the ERM-II vulnerable to currency crises and creates conditions for a widespread currency and asset substitution in the accession countries. As a result, the required participation of all accession countries in the ERM-II imposes unnecessary costs on the whole enlargement process. The costs could be avoided if the EU adopted a more flexible approach to the enlargement of its monetary union, allowing for an individual path of adopting the euro in each accession country depending on the country's economic conditions. |
| Tipo: Working or Discussion Paper |
Palavras-chave: EU enlargement; Monetary integration; Currency crisis; Asset substitution; Financial Economics; F32; F33; F36. |
| Ano: 2004 |
URL: http://purl.umn.edu/26309 |
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| Corsetti, Giancarlo; MacKowiak, Bartosz. |
| We study the interaction of fiscal and monetary policies during a currency crisis in an economy with government nominal liabilities. We show that the stock and maturity of these liabilities are key determinants of the magnitude, timing and predictability of a devaluation. Among notable features of our model, monetary authorities defend the currency parity conditional on the level of the interest rate, rather than on the stock of international reserves; budget deficits need not be high before a currency crisis; postdevaluation inflation may exhibit little persistence, and money demand need not fall after the crisis. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Currency crisis; Speculative attacks; Fiscal policy; Financial Economics; F31; F33; E58. |
| Ano: 2000 |
URL: http://purl.umn.edu/28516 |
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