Exchange Rate Policy under Sovereign Default Risk

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.

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Year of publication:	2011
Authors:	Schabert, Andreas
Publisher:	Amsterdam and Rotterdam : Tinbergen Institute
Subject:	Zinspolitik \| Flexibler Wechselkurs \| Internationale Staatsschulden \| Länderrisiko \| Kleine offene Volkswirtschaft \| Theorie \| Exchange rate peg \| interest rate policy \| equilibrium determination \| sovereign default \| public debt

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Series:	Tinbergen Institute Discussion Paper ; 11-027/2
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	840102305 [GVK] hdl:10419/86879 [Handle] RePEc:dgr:uvatin:20110027 [RePEc]
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization ; F31 - Foreign Exchange ; F41 - Open Economy Macroeconomics
Source:	EconStor

Persistent link: https://www.econbiz.de/10010325864