We present a stylized framework which encompasses a variety of qbalance sheet approachesq to currency crises that have been suggested in the literature, and analyze their policy implications. The common theme is that currency and maturity mismatches in private sector balance sheets constrain the capacity of monetary and fiscal policies to deal with self-fulfilling capital account crises, and generate a role for international crisis lending. International lending could be used to back domestic last-resort lending to banks, or to loosen fiscal constraints. Provided they have a sound fiscal position in normal times, this can make countries immune to self-fulfilling crises.This paper will answer these questions in the context of a simple framework that encompasses a in a highly stylized way ... The first class of models combines a currency mismatch with a maturity mismatch: debt is not only in foreign currencyanbsp;...
|Title||:||"Original Sin," Balance Sheet Crises, and the Roles of International Lending|
|Author||:||Olivier Jeanne, Jeromin Zettelmeyer|
|Publisher||:||International Monetary Fund - 2002-12-01|