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dc.contributor.authorHeer B
dc.contributor.authorSchubert SF
dc.contributor.editor
dc.date.accessioned2019-04-29T12:08:35Z
dc.date.available2019-04-29T12:08:35Z
dc.date.issued2012
dc.identifier.issn0261-5606
dc.identifier.urihttp://dx.doi.org/10.1016/j.jimonfin.2012.02.007
dc.identifier.urihttps://www.sciencedirect.com/science/article/pii/S0261560612000484
dc.identifier.urihttp://hdl.handle.net/10863/9624
dc.description.abstractThe paper analyzes the dynamic effects of a total factor productivity shock and an interest rate risk premium shock in a highly indebted open economy. In contrast to the standard open economy framework, search unemployment and wage bargaining are introduced. We find that a negative total factor productivity shock primarily has effects on the economy's production side and on welfare, but not on its stock of foreign debt and the country specific risk premium, and large part of the adjustment happens in the short-run. In contrast, a pure increase in the country specific risk premium causes substantial dynamics and a considerable reduction in foreign debt, allowing higher consumption in the long run and creating an intertemporal welfare gain, even though unemployment increases strongly in the short-run. A 50% haircut of foreign debt significantly reduces the initial response of the unemployment rate. In case of a temporary productivity shock, sticky wages imply smaller employment, but generate higher welfare than flexible wages.en_US
dc.languageEnglish
dc.language.isoenen_US
dc.relation
dc.rights
dc.titleUnemployment and debt dynamics in a highly indebted small open economyen_US
dc.typeArticleen_US
dc.date.updated2019-02-19T10:03:25Z
dc.publication.title
dc.language.isiEN-GB
dc.journal.titleJournal of International Money and Finance
dc.description.fulltextreserveden_US


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