Diamond-Dybvig Banks in two-good, two-currecies, small open economies with cash - in - advance constraints.¤
نویسنده
چکیده
This paper analyzes a two-good version of the Diamond and Dybvig model in a small open economy. This structure is used to analyze the interaction between banks as liquidity insurers, real exchange rates and monetary policies. With ...xed exchange rates and local lender of last resort, non-tradeables price de‡ation is necessary for existence as well as for implementation. Conditions for currency crises are reduced to the standard international illiquidity condition of Chang and Velasco (1998). The paper also discusses ‡exible exchange rates with peso-denominated deposits as well as dollarized banking systems.
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