Exit expectations and debt crises in currency unions?
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- dc.contributor.author Kriwoluzky, Alexanderca
- dc.contributor.author Müller, Gernot J.ca
- dc.contributor.author Wolf, Martinca
- dc.date.accessioned 2016-04-27T16:07:17Z
- dc.date.available 2016-04-27T16:07:17Z
- dc.date.issued 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.ca
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/26192
- dc.language.iso engca
- dc.relation.ispartofseries Ademu Working Papers Series;5
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- 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.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
- dc.subject.keyword Currency unionen
- dc.subject.keyword Sovereign debt crisisen
- dc.subject.keyword Fiscal policyen
- dc.subject.keyword Redenomination premiumen
- dc.subject.keyword Euro crisisen
- dc.subject.keyword Regime-switching modelen
- dc.title Exit expectations and debt crises in currency unions?ca
- dc.type info:eu-repo/semantics/workingPaperca