We provide a simple framework to study the prudential use of capital controls and currency
reserves that have been explored in the recent literature. We cover the role of both …

What is the optimal fiscal policy response to a recession when the government is subject to
sovereign risk? We study this question in a model of endogenous sovereign default with …

What is the role of emigration in a deep recession when the government implements fiscal
consolidation? To answer this question, we build a small open economy New Keynesian …

What is the optimal fiscal policy response to a recession when the government is subject to
sovereign risk? We study this question in a model of endogenous sovereign default with …

This paper examines the state-dependent multipliers of government spending in sudden
stop economies. First, I provide cross-country evidence that an increase in government …

Of the different types of government outlays, since the 2000s public investment has been the
main variable of adjustment during recessions in advanced and emerging economies …

Issuances of state-contingent sovereign bonds have been limited both in quantity and
frequency. One of the reasons argued in the literature is that these bonds would carry a …

A model with two essential elements, sovereign default and distortionary fiscal and monetary
policies, explains the interaction between sovereign debt, default risk and inflation in …

Fiscal Policy, Sovereign Risk, and Unemployment Page 1 Fiscal Policy, Sovereign Risk,
and Unemployment Javier Bianchi Pablo Ottonello FRB Minneapolis and NBER University …

Sovereign debt crises coincide with deep recessions. I propose a model of sovereign debt
that rationalizes large contractions in economic activity via an aggregate-demand …