Is-Lm-Bp in the Pampas
33 Pages Posted: 15 Nov 2002 Last revised: 8 Jul 2021
Date Written: November 2002
Emerging markets (sometimes endowed with fertile pampas) have limited access to world capital markets and suffer from original sin: they cannot borrow in their own currency. Does this mean that monetary and exchange rate policy has non-standard effects in such countries? We develop a simple IS-LM-BP model with balance sheet effects to study that question. Our answer: it all depends.
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