Capital controls and external debt term structure

In my dissertation, I explore the relationship between capital controls and the choiceof the maturity structure of external debt in a general equilibrium setup, incorporatingexplicitly the role of international lenders. I look at specific types of capital controlswhich take the form of date-specific and maturity-specific reserve requirements onexternal borrowing. I consider two questions: How is the maturity structure of externaldebt determined in a world general equilibrium? What are the effects of date- andmaturity-specific reserve requirements on the maturity structure of external debt? Canthey prevent a bank run?I develop a simple Diamond-Dybvig-type model with three dates. In the low incomecountries, banks arise endogenously. There are two short-term bonds and one long-termbond offered by the domestic banks to international lenders. First I look at a simplemodel were international lending is modeled exogenously. I consider explicitly thematurity composition of capital inflows to a domestic economy. I show that the holdingsof both short-term bonds are not differentiated according to date.Second, I consider international lending behavior explicitly. The world consists oftwo large open economies: one with high income and one with low income. The high income countries lend to low income countries. There exist multiple equilibria and someare characterized by relative price indeterminacy.Third, I discuss date-specific and maturity- specific reserve requirements. In mysetup reserve requirements play the role of a tax and the role of providing liquidity foreach bond at different dates. I show that they reduce the scope of indeterminacy. In someequilibria, I identify a case in which the reserve requirement rate on the long-term debtmust be higher than that on the short-term debt for a tilt towards a longer maturitystructure.Fourth, I introduce the possibility of an unexpected bank run. I show that somespecific combination of date-and maturity-specific reserve requirements reduce thevulnerability to bank runs. With regard to the post-bank-run role of international lenders,I show that international lenders may still want to provide new short-term lending to thebank after the occurrence of a bank run.