Show simple item record Kriwoluzky, Alexander Müller, Gernot J. Wolf, Martin 2016-04-27T16:07:17Z 2016-04-27T16:07:17Z 2016-04
dc.description.abstract Membership in a currency union is not irreversible. Exit expectations may emerge during sovereign debt crises, because exit allows countries to reduce their liabilities through a currency redenomination. As market participants anticipate this possibility, sovereign debt crises intensify. We establish this formally within a small open economy model of changing policy regimes. The model permits explosive dynamics of debt and sovereign yields inside currency unions and allows us to distinguish between exit expectations and those of an outright default. By estimating the model on Greek data, we quantify the contribution of exit expectations to the crisis dynamics during 2009–2012.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Ademu Working Papers Series;5
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.title Exit expectations and debt crises in currency unions?
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Currency union
dc.subject.keyword Sovereign debt crisis
dc.subject.keyword Fiscal policy
dc.subject.keyword Redenomination premium
dc.subject.keyword Euro crisis
dc.subject.keyword Regime-switching model
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess


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