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dc.contributor.author Fornaro, Luca
dc.date.accessioned 2023-01-25T13:35:46Z
dc.date.available 2023-01-25T13:35:46Z
dc.date.issued 2015
dc.identifier.citation Fornaro L. Financial crises and exchange rate policy. Journal of International Economics. 2015 Mar;95(2):202-15. DOI: 10.1016/j.jinteco.2014.11.009
dc.identifier.issn 0022-1996
dc.identifier.uri http://hdl.handle.net/10230/55437
dc.description.abstract This paper studies exchange rate policy in a small open economy model featuring an occasionally binding collateral constraint and Fisherian deflation. The goal is to evaluate the performance of alternative exchange rate policies in sudden stop-prone economies. The key element of the analysis is a pecuniary externality arising from frictions in the international credit markets, which creates a trade-off between price and financial stability. The main result is that depreciating the exchange rate during a financial crisis has a positive impact on welfare, because the stimulus provided by a depreciation sustains asset prices, value of collateral, and access to the international credit markets.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Elsevier
dc.relation.ispartof Journal of International Economics. 2015 Mar;95(2):202-15
dc.rights © Elsevier http://dx.doi.org/10.1016/j.jinteco.2014.11.009
dc.title Financial crises and exchange rate policy
dc.type info:eu-repo/semantics/article
dc.identifier.doi http://dx.doi.org/10.1016/j.jinteco.2014.11.009
dc.subject.keyword Financial crises
dc.subject.keyword Monetary policy
dc.subject.keyword Sudden stops
dc.subject.keyword Exchange rate regime
dc.subject.keyword Nominal wage rigidities
dc.subject.keyword Pecuniary externalities
dc.rights.accessRights info:eu-repo/semantics/openAccess
dc.type.version info:eu-repo/semantics/acceptedVersion

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