Exchange Rate Policy under Sovereign Default Risk

Research, Preprint English OPEN
Andreas Schabert;
  • Publisher: Tinbergen Institute Amsterdam and Rotterdam
  • Subject: Flexibler Wechselkurs | Länderrisiko | info:eu-repo/classification/ddc/330 | E52 | F31 | public debt | info:eu-repo/classification/ddc/310 | Monetary policy options | Zinspolitik | Exchange rate peg, interest rate policy, equilibrium determination, sovereign default, public debt | interest rate policy | equilibrium determination | Internationale Staatsschulden | Exchange rate peg | Intertemporal insolvency | F41 | E63 | Kleine offene Volkswirtschaft | sovereign default | info:eu-repo/classification/ddc/620 | Small open economy | Equilibrium | Theorie
    • jel: jel:F41 | jel:E63 | jel:F31 | jel:E52
      ddc: ddc:330

We examine monetary policy options for a small open economy where sovereign default might occur due to intertemporal insolvency. Under interest rate policy and floating exchange rates the equilibrium is indetermined. Under a fixed exchange rate the equilibrium is unique... View more
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