The paper presents a three period model that studies the eects of IMF loans on borrowers’ and lenders’ welfare highlighting the fact that the IMF has both de jure and de facto seniority rights over private creditors. It is shown that an IMF intervention affects borrowers and...

This paper presents a dynamic model for a small open economy with imperfect financial market. It provides a framework to analyze the role of credit constraints and debt denomination in the generation and amplification of macroeconomic instability in an open economy context. As in Bernanke and...

Macroeconomics has a long tradition of inspecting and interpreting patterns in graphs of aggregate data. However, the move towards more precise quantification of macroeconomic phenomena has seen academics shift away from a study of turning points, which are a natural and obvious way of...