Économies emergentes : l'incompatibilité entre changes flexibles et dettes en devises
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.
Volume (Year): 116 (2006)
Issue (Month): 4 ()
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