Empirical studies suggest that fluctuations in the level and volatility of world interest rate affect sovereign spreads emerging economies. We incorporate an estimated time-varying process for (with both shocks) into a model default calibrated to panel Time variation interacts with incentives leads state contingent effects similar empirical literature. On average, response rise delivers 1.4 tim...

We provide an estimated DSGE model of a small open economy with both domestic and international financial market frictions. Firms face credit constraints trade intrinsically useless asset. Low foreign interest rates are conducive to bubble formation. An asset provides liquidity relaxes constraints. It powerful amplification propagation mechanism. Our based on Bayesian methods explains the high ...

The introduction of microcredit has drawn significant attention to the interest rates charged by microfinance institutions, capturing policymakers worldwide. Despite competitive nature market, borrowers still bear burden relatively high rates. Similar other loans, requires repayment, and rate is determined various factors. Nevertheless, acknowledging that intrinsically linked risk associated wi...