Franklin

Why Do Emerging Economies Borrow in Foreign Currency? [electronic resource] Jeanne, Olivier.

Author/Creator:
Jeanne, Olivier.
Publication:
Washington, D.C. : International Monetary Fund, 2003.
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 03/177.
IMF Working Papers; Working Paper No. 03/177
Format/Description:
Government document
Book
1 online resource (38 p.)
Local subjects:
Balance sheet effects.
Borrowing.
Capital and Ownership Structure.
Central bank.
Currency composition.
Currency composition of debt.
Currency debt.
Currency debts.
Currency mismatch.
Currency mismatches.
Currency risks.
Debt contract.
Debt contracts.
Debt market.
Debt outstanding.
Debt structure.
Dollar value.
Domestic currencies.
Domestic currency.
Domestic debt.
Domestic debts.
Domestic investors.
Emerging markets.
Financial Aspects of Economic Integration.
Financing Policy.
Foreign currency.
Foreign currency debt.
Foreign Exchange.
Inflation.
Inflation rate.
International debt.
International lending.
Long-term debt.
Monetary policy.
Nominal interest rate.
Private debt.
Public debt.
Real interest rate.
Real interest rates.
Real value.
Reserve bank.
Short-term debt.
Sovereign debt.
Sovereign default.
Terms of debts.
Brazil.
Chile.
Hong Kong Special Administrative Region of China.
Mexico.
Saint Lucia.
Summary:
This paper explores the hypothesis that the dollarization of liabilities in emerging market economies is the result of a lack of monetary credibility. I present a model in which firms choose the currency composition of their debts so as to minimize their probability of default. Decreasing monetary credibility can induce firms to dollarize their liabilities, even though this makes them vulnerable to a depreciation of the domestic currency. The channel is different from the channel studied in the earlier literature on sovereign debt, and it applies to both private and public debt. The paper presents some empirical evidence and discusses policy implications.
Notes:
Description based on print version record.
Contributor:
Jeanne, Olivier.
Other format:
Print Version:
ISBN:
1451858892:
9781451858891
ISSN:
1018-5941
Publisher Number:
10.5089/9781451858891.001
Access Restriction:
Restricted for use by site license.
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