Working Paper: NBER ID: w9337
Authors: Luis Felipe Céspedes; Roberto Chang; Andrés Velasco
Abstract: Emerging markets (sometimes endowed with fertile pampas) have limited access to world capital markets and suffer from original sin: they cannot borrow in their own currency. Does this mean that monetary and exchange rate policy has non-standard effects in such countries? We develop a simple IS-LM-BP model with balance sheet effects to study that question. Our answer: it all depends.
Keywords: No keywords provided
JEL Codes: E0; F0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| adverse external shocks (F41) | domestic real effects (H31) |
| devaluation (F31) | economic outcomes (F61) |
| balance sheet effects (G32) | economic outcomes (F61) |
| risk premium (G19) | investment (G31) |
| risk premium (G19) | output (C67) |
| real exchange rate (F31) | risk premium (G19) |
| investment (G31) | risk premium (G19) |
| output (C67) | risk premium (G19) |