Sudden stops, financial frictions, and labor market flows: Evidence from Latin America

Sudden Stops and Exchange Rate Strategies in Latin America

Financial Frictions, Sudden Stops, and the External Capital Structure of Emerging Markets

This paper argues that credit frictions and asset trading costs signi cantly increase the probability of a Sudden Stop in the early stages of nancial globalization, and that this in turn, signi cantly alters the long-run external capital structure of emerging market economies. Upon opening the capital account, domestic agents have an incentive to accumulate debt and sell domestic equity in orde...

Disinflation with labor market frictions

This paper studies disinflationary shocks in a non-linear New Keynesian model with search and matching frictions and moral hazard in the labor markets. Our focus is on understanding the wage formation process as well as welfare costs of disinflations in the presence of such labor market frictions. The presence of imperfect information in labor markets imposes a lower bound on worker surplus tha...

Labor-Market Frictions and Optimal Inflation∗

In main theories of monetary non-neutrality the Ramsey optimal inflation rate varies between the negative of the real interest rate and zero. This paper explores how the interaction of nominal wageand search and matching frictions affect the planners choice. We show that adding the combination of such frictions to the canonical monetary model can generate an optimal inflation that is significan...

Unemployment, Financial Frictions, and the Housing Market

We develop and calibrate a two-sector, search-matching model of the labor market augmented to incorporate a housing market and a frictional goods market. The labor market is divided into a construction sector and a non-housing sector, and there is perfect mobility of unemployed workers across sectors. In the frictional goods market households, who lack commitment, …nance random consumption oppo...