TY  - GEN
AU  - Tomell, Aaron
AU  - Velasco, Andrés
TI  - Fiscal Discipline and the Choice of Exchange Rate Regime
PY  - 2010
Y1  - 2010/12/06
DO  - 10.18235/0010747
AB  - Conventional wisdom claims that fixed exchange rates provide more fiscal discipline than do flexible rates, but the recent experiences in Europe, the record of Sub-Saharan countries in the 1980s, and the history of stabilization attempts in Latin America cast empirical doubts on this wisdom. To explore this puzzle we present a standard intertemporal model with perfect capital mobility and price flexibility, in which fiscal policy is endogenously determined by a maximizing fiscal authority.
UR  - https://doi.org/10.18235/0010747
ER  -