A simple theoretical framework for the analysis of liability dollarization
This paper presents a simple model of debt contracts in order to analyze the conditions under which domestic residents would choose to denominate debts in "dollars". In the model, borrowers are producers of non-traded goods, and subject to shocks on prices. The real exchange rate varies in...
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| Autores principales: | , |
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| Formato: | Objeto de conferencia |
| Lenguaje: | Inglés |
| Publicado: |
2004
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| Materias: | |
| Acceso en línea: | http://sedici.unlp.edu.ar/handle/10915/3800 http://www.depeco.econo.unlp.edu.ar/jemi/2004/trabajo12.pdf |
| Aporte de: |
| Sumario: | This paper presents a simple model of debt contracts in order to analyze the conditions under which domestic residents would choose to denominate debts in "dollars". In the model, borrowers are producers of non-traded goods, and subject to shocks on prices. The real exchange rate varies in response to real shocks. There is a domestic unit of account; prices in terms of that unit can be shocked by a (presumably policy-induced) disturbance. Debt obligations can be denominated in either traded goods (dollarized contracts) or local currency. When real and nominal shocks are possitively correlated, dollarized contracts tend to be preferable to (non-contingent) nominal contracts when nominal shocks are large and real shocks are small. |
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