Rollover Crises and Currency Unions

Javier Bianchi and Jorge Mondragon

No 1215, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: This paper examines how an economy that belongs to a currency union is more vulnerable to a rollover crisis. We study a model of endogenous sovereign default with self-fulfilling rollover crisis and downward nominal wage rigidity. We show that a reces- sion triggered by self-fufilling beliefs about a rollover crisis pushes the economy towards more frequent defaults.

Date: 2018
New Economics Papers: this item is included in nep-dge and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:1215

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