a discretionary policy, the existence of domestic debt creates a costly inflation bias. On the other hand, the cost of … inflation and external default costs drives the dynamics of the domestic/foreign composition of sovereign debt. This model … debt-to-GDP ratios. The model also proposes a new channel justifying why inflation hikes occur before external default …

Markov-switching analysis that allows for variation across stable and volatile domestic inflation regimes, we find evidence … of significant inflation transmission from China to Australia and the five larger ASEAN economies. Chinese inflation … Autoregressive (MSVAR) framework. The importance of allowing for regime change over our sample period is clear and these inflation …