Original sin analysing its mechanics and a proposed remedy in a simple macroeconomic model / Axel Lindner
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Discovery
514273267
URN
urn:nbn:de:gbv:3:2-4768
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle : Inst. für Wirtschaftsforschung, 2006
Umfang
Online-Ressource (Text, 114 KB)
Ausgabevermerk
Sprache
eng
Anmerkungen
Inhaltliche Zusammenfassung
This paper analyses the problem of "original sin" (the fact that the currency of an emerging market economy usually cannot be used to borrow abroad) in a simple thirdgeneration model of currency crises. The approach differs from alternative frameworks by explicitly modeling the price setting behavior of firms if prices are sticky and the future exchange rate is uncertain. Monetary policy optimally trades off effects on price competitiveness and on debt burdens of firms. It is shown that the proposal by Eichengreen and Hausmann of creating an artificial basket currency as denominator of debt is attractive as a provision against contagion.
Schriftenreihe
IWH-Diskussionspapiere ; 2006,11 ppn:37244492X