Exchange rate policy under sovereign default risk

Andreas Schabert

Economics Letters, 2011, vol. 112, issue 2, 179-181

Abstract: We examine monetary policy options for a small open economy where sovereign default might occur due to intertemporal insolvency. Under interest rate policy and floating exchange rates the equilibrium is indetermined. Under a fixed exchange rate the equilibrium is uniquely determined and independent of sovereign default.

Keywords: Exchange; rate; peg; Interest; rate; policy; Equilibrium; determination; Sovereign; default; Public; debt (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176511001418
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Exchange Rate Policy under Sovereign Default Risk (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:112:y:2011:i:2:p:179-181

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().