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This paper analyzes the trade-off between official liquidity provision and debtor moral hazard ininternational financial crises. In the model, crises are caused by the interaction of bad fundamentals,self-fulfilling runs and policies by three classes of optimizing agents: international...
Persistent link: https://www.econbiz.de/10008911499
The provision of liquidity by international institutions such as the IMF to countries experiencing balance of payment problems could prevent liquidity runs but could also cause moral hazard distortions: expecting to be bailed out by the IMF, debtor countries would have weak incentives to...
Persistent link: https://www.econbiz.de/10005067528
This Paper builds a baseline two-country model of real and monetary transmission in the presence of optimal international price discrimination by firms. Distributing traded goods to consumers requires non-tradables, intensive in local labour. Because of distributive trade the price elasticity of...
Persistent link: https://www.econbiz.de/10005124101
'New open economy macroeconomics' (NOEM) refers to a body of literature embracing a new theoretical framework for policy analysis in open economy, aiming to overcome the limitations of the Mundell-Fleming model while preserving the empirical wisdom and policy friendliness of traditional...
Persistent link: https://www.econbiz.de/10005789191
In this Paper we show that a currency area can be a self-validating optimal policy regime, even when monetary unification does not foster real economic integration and intra-industry trade. This is because profit-maximizing producers in a currency area adopt endogenous pricing strategies that...
Persistent link: https://www.econbiz.de/10005661477
Persistent link: https://www.econbiz.de/10003651939
Persistent link: https://www.econbiz.de/10003668482
Persistent link: https://www.econbiz.de/10001697774
Persistent link: https://www.econbiz.de/10001650463
In this paper we show that a currency area can be a self-validating optimal policy regime, even when monetary unification does not foster real economic integration and intra-industry trade. This is because profit-maximizing producers in a currency area adopt endogenous pricing strategies that...
Persistent link: https://www.econbiz.de/10012469932