The authors show that an increase in international borrowing increases specialization and unemployment in a small open … terms-of-trade risks, firms in the export sector offer workers a stable wage rate with the possibility of unemployment. An … increase in international borrowing increases specialization in the export sector, which leads to higher unemployment when the …

a highly indebted open economy. In contrast to the standard open economy framework, search unemployment and wage … intertemporal welfare gain, even though unemployment increases strongly in the short run. A 50% haircut of foreign debt … significantly reduces the initial response of the unemployment rate. In case of a temporary productivity shock, sticky wages imply …

a highly indebted open economy. In contrast to the standard open economy framework, search unemployment and wage … intertemporal welfare gain, even though unemployment increases strongly in the short run. A 50% haircut of foreign debt … significantly reduces the initial response of the unemployment rate. In case of a temporary productivity shock, sticky wages imply …