Chang, Roberto and Velasco, Andres 
ORCID: 0000-0003-0441-5062
(2007)
Endogenous financial dollarization and exchange rate policy.
Journal of Policy Reform, 8 (4).
pp. 263-280.
ISSN 1384-1289
Abstract
We develop a simple model of an economy in which domestic agents borrow and lend from each other in either home or foreign currency. Nominal wage rigidity implies that portfolios are chosen to offset the real variability of labor income. Portfolio choices, in turn, affect the potency of monetary policy, and the mapping from exogenous shocks to aggregate outcomes. The model sheds light on the determinants and implications of financial dollarization, its interaction with monetary policy, and other current issues.
| Item Type: | Article |
|---|---|
| Official URL: | https://www.tandfonline.com/toc/gpre19/current |
| Additional Information: | © 2007 Taylor & Francis |
| Divisions: | School of Public Policy ?? SCPP ?? |
| Subjects: | H Social Sciences > HG Finance |
| JEL classification: | F - International Economics > F3 - International Finance > F31 - Foreign Exchange F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics |
| Date Deposited: | 11 Oct 2019 14:15 |
| Last Modified: | 14 Sep 2024 07:59 |
| URI: | http://eprints.lse.ac.uk/id/eprint/102065 |
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