Debt in emerging markets and developing economies is at its highest level in half a century.
In about 9 in 10 emerging markets and developing economies, debt is higher now than it …

Abstract We recast the Aiyagari–Bewley–Huggett model of income and wealth distribution in
continuous time. This workhorse model—as well as heterogeneous agent models more …

Page 1 INTERNATIONAL MONETARY FUND RESEARCH DEPARTMENT Monetary Finance
Do Not Touch, or Handle with Care? Prepared by Itai Agur, Damien Capelle, Giovanni …

In 2007, countries in the euro zone periphery were enjoying stable growth, low deficits, and
low spreads. Then the financial crisis erupted and pushed them into deep recessions …

The covered interest rate parity (CIP) condition is a fundamental arbitrage relationship in
international finance. In this chapter, we review its breakdown during the Global Financial …

We study slow moving debt crises: self-fulfilling equilibria in which high interest rates, due to
the fear of a future default, lead to a gradual but faster accumulation of debt, ultimately …

We introduce a new measure of emerging market sovereign credit risk: the local currency
credit spread, defined as the spread of local currency bonds over the synthetic local …

The question of what is a sustainable public debt is paramount in the macroeconomic
analysis of fiscal policy. This question is usually formulated as asking whether the …

In this chapter, we use a benchmark limited-commitment model to explore key issues in the
economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign …

We provide a comprehensive account of the evolution of the currency composition of
sovereign and corporate external borrowing by emerging markets from 2003 to 2017. We …