We study the interaction between borrowers' and banks' solvency in a quantitative macroeconomic model with financial frictions in which bank assets are a portfolio of defaultable loans. We show that ex-ante imperfect diversification of bank lending generates bank asset returns with limited...

We study the interaction between borrowers' and banks' solvency in a quantitative macroeconomic model with financial frictions in which bank assets are a portfolio of defaultable loans. We show that ex-ante imperfect diversification of bank lending generates bank asset returns with limited...

This paper analyses the history and effectiveness of the two major mechanisms of resolution of balance of payments crisis. It argues that IMF lending has met its counter-cyclical objectives through history and has been improving in terms of providing adequate lending facilities as well as...

Intro -- Preface -- Introduction -- Part I - Early Rumblings -- Introduction to Part I -- 1 Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors - Guillermo A. Calvo, Leonardo Leiderman, and Carmen M. Reinhart -- 2 Capital Inflows to Latin America:...