On the timing of balance of payments crises: Disaggregated information and interest rate policy
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- dc.contributor.author Broner, Fernandoca
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2017-07-26T10:51:06Z
- dc.date.available 2017-07-26T10:51:06Z
- dc.date.issued 1999-12-01
- dc.date.modified 2017-07-23T02:09:20Z
- dc.description.abstract This paper proposes a dynamic framework to study the timing of balance of payments crises. The model incorporates two main ingredients: (i) investors have private information; (ii)investors interact in a dynamic setting, weighing the high returns on domestic assets against the incentives to pull out before the devaluation. The model shows that the presence of disaggregated information delays the onset of BOP crises, giving rise to discrete devaluations. It also shows that high interest rates can be eective in delaying and possibly avoiding the abandonment of the peg. The optimal policy is to raise interest rates sharply as fundamentals become very weak. However, this policy is time inconsistent, suggesting a role for commitment devices such as currency boards or IMF pressure.
- dc.format.mimetype application/pdfca
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=840
- dc.identifier.uri http://hdl.handle.net/10230/978
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 840
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword currency crises; timing; disaggregated information; interest rate defenses.
- dc.subject.keyword Macroeconomics and International Economics
- dc.title On the timing of balance of payments crises: Disaggregated information and interest rate policyca
- dc.type info:eu-repo/semantics/workingPaper