This paper explains how mortgage market liberalization can introduce greater volatility in the housing market, which is a stylized fact documented from OECD countries, with a DSGE model where households face a credit constraint and housing is used as collateral. The housing collateral constraint creates a link between the housing market and borrowing capacity, a […]

This paper addresses the question of whether fear of floating in developing countries can be justified as optimal discretionary monetary policy in a dollarized economy where intermediate goods importers face Bernanke-type credit constraint. Exchange rate depreciation not only worsens the net-worth but also increases the financing amount of importer firms who borrow in foreign currency, […]