Na, Seunghoon; Schmitt-Grohe, Stephanie; Uribe, Martin; … - Department of Economics, Emory University - 2014
This paper characterizes jointly optimal default and exchange-rate policy. The theoretical environment is a small open economy with downward nominal wage rigidity as in Schmitt-Grohe and Uribe (2013) and limited enforcement of international debt contracts as in Eaton and Gersovitz (1981). It is...