A Simple Model of Monetary Pollicy and Currency Crises

Research, Preprint OPEN
Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit;
  • Publisher: Gerzensee: Swiss National Bank, Study Center Gerzensee
  • Subject: Währungskrise | Wirtschaftsmodell | Geldpolitik | Theorie
    • ddc: ddc:330

This paper analyzes the optimal interest rate policy in currency crises. Firms are credit constrained and have debt in domestic and foreign currency, a situation that may easily lead to a currency crisis. An interest rate increase has an ambiguous effect on firms since ... View more
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