Must Original Sin Cause Macroeconomic Damnation?

Luis Cespedes, Roberto Chang and Andrés Velasco

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: Original sin, coupled with other financial imperfections, causes macroeconomic penance of two kinds: adverse shocks have larger and more persistent effects and monetary policy becomes less effective as a shock absorber. But macroeconomic damnation is not inevitable: in some cases, suitable changes in money and exchange rates can still partially stabilize output, investment and consumption.

Date: 2003-10
New Economics Papers: this item is included in nep-ifn and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:234

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