Optimal debt and equilibrium exchange rates in a Stochastic Environment: An Overview

In July 1997, the economies of East Asia became embroiled in one of the worst financial crises of the postwar period. Yet, prior to the crisis, these economies were seen as models of economic growth experiencing sustained growth rates that exceeded those earlier thought unattainable. Similarly in 1998, the financial markets, the economics profession and the International Monetary Fund viewed Argentina as a model of stability and growth. In 2001- 02 the Argentine economy defaulted on its huge debt.