This paper studies the process of capital inflow management and speculative inflows for countries pursuing the joint goals of monetary and exchange rate management. We introduce a sticky-price model with imperfect asset substitutability in which a central bank engages in costly sterilization to...

This paper examines the movements of exchange rates and capital flows in an environment where an optimizing central bank pursuing the joint goals of inflation and output targeting engages in costly sterilization activities. Our results predict that when faced with increased sterilization costs,...

The costs of primary commodity price instability are reviewed and can be significant. Stabilization is problematic, given high serial correlation. Rolling over a sequence of one-year futures hedges can be quite effective and the optimal hedge is derived but encounters the problem of sovereign...

When sovereign debt trades at a discount on secondary markets, a market buyback increases the secondary market price. The wealth of private creditors increases because part of the funds used in the repurchase is a transfer payment to them. This transfer of resources can be mitigated by imposing...