Aoki, Kosuke; Benigno, Gianluca; Kiyotaki, Nobuhiro - London School of Economics (LSE) - 2006
We study theoretically how an economy adjusts to liberalization of interna-tional financial transaction. We consider an economy in which debtors do not repay unless the debts are secured by collateral, and collateralizable assets for international borrowing are more restricted than domestic...