Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit V. - 1998
this essay we develop a simple model of a small open economy producing a tradeable good using a non-tradeable input and …, including an unrestricted opening to foreign lending, can destabilize an emerging market economy, in contrast output volatility … can be avoided if the same economy opens up to foreign direct investment only. We also draw several policy conclusions …