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Économies emergentes : l'incompatibilité entre changes flexibles et dettes en devises


  • Damien Besancenot
  • Radu Vranceanu


At the end of the nineties, many developing countries featured an open capital market and relied heavily on dollar-debt financing of their private sector. This paper analyses whether, in this context, adopting a clean floating exchange rate regime can be a sustainable policy choice. In the model, successive generations of investors must decide whether they hold or not the debt of a representative firm from the non-tradable sector. The exchange rate is subject to random shocks, which makes uncertain the firm’s solvency. We show that a small risk of insolvency would bring about a much larger risk of illiquidity.

Suggested Citation

  • Damien Besancenot & Radu Vranceanu, 2006. "Économies emergentes : l'incompatibilité entre changes flexibles et dettes en devises," Revue d'économie politique, Dalloz, vol. 116(4), pages 555-574.
  • Handle: RePEc:cai:repdal:redp_164_0555

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    References listed on IDEAS

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    6. Madura, Jeff & Tucker, Alan L. & Zarruk, Emilio, 1992. "Reaction of bank share prices to the Third-World debt reduction plan," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 853-868, September.
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    8. Millon-Cornett, Marcia H. & Tehranian, Hassan, 1989. "Stock market reactions to the depository institutions deregulation and monetary control act of 1980," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 81-100, March.
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