A note on the credibility of bank-run-preventing devaluation policies
In this note I provide a notion of a credible devaluation policy in the context of the Chang and Velasco (2000) model. I show that when the long term asset is illiquid enough a flexible exchange rate policy is credible. It is also shown that there exists a non-trivial range for the liquidation valu...
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| Format: | Article |
| Language: | English |
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Universidad Nacional de La Plata
2002-12-01
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| Series: | Económica |
| Online Access: | https://revistas.unlp.edu.ar/Economica/article/view/8515 |