This paper studies the international propagation of sovereign debt default. We posit a two-country economy where capital constrained banks grant loans to firms and invest in bonds issued by the domestic and the foreign government. The model economy is calibrated to data from Europe, with the two...

We develop a simple model that highlights the costs and benefits of fixed exchange rates as they relate to trade, and show that negative export-price shocks reduce fiscal revenue and increase the likelihood of an expected currency devaluation. Using a new high-frequency data set on...

The hub-periphery development pattern of the Guangdong economy, to some extent, is a miniature of that of the Chinese economy. The Pearl River Delta, drawing from its first-nature comparative advantages in factor endowments and proximity to Hong Kong SAR, China, and Macau SAR, China, and the...

This paper examines the stability of core-periphery interbank networks in a static simulation framework. We also compare the results of the full-scale simulation with a mean-field approach.The main results are as follows: (i) the model exhibits n-dependence: compared to the benchmark network...

This paper examines the financial stress interconnectedness among GIIPS economies and Germany. Based on market level financial stress indices, it examines the stress transmission process as well as the causal network relationships in banking sector, bond, money and stock markets. The period...