Exchange rate policy under sovereign default risk
Loading...
Date
2011-02-08
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
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 uniquely determined and independent of sovereign default.
Description
Table of contents
Keywords
Equilibrium, Intertemporal insolvency, Monetary policy options, Small open economy