Schmitt-Grohé, Stephanie Schmitt-Grohe; Na, Seunghoon; … - National Bureau of Economic Research (NBER) - 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-Grohé and Uribe (2013) and limited enforcement of international debt contracts as in Eaton and Gersovitz (1981). It is...