currency crises is driven by the interplay between private firms' credit-constraints and nominal price rigidities. Despite our … analysis hinges on four main features: i) ex post deviations from purchasing power parity; ii) credit constraints a la Bernanke …

This paper presents a simple model of currency crises which is driven by the interplay between the credit constraints … output in a credit-constrained economy, which in turn reduces the demand for the domestic currency and leads to a …