Durdu, C. Bora - Society for Computational Economics - SCE - 2006
analyzes the macroeconomic implications of these bonds using a general equilibrium model of a small open economy with financial … frictions. In the absence of indexed bonds, negative shocks to productivity or to the terms of trade trigger Sudden Stops … through a debt-deflation mechanism. This paper establishes that whether indexed bonds can help to prevent Sudden Stops depends …