Banking limits on foreign holdings : disentangling the portfolio balance channel

Borradores de Economia
Number: 
934
Published: 
Classification JEL: 
C14, C21, C31, E58, F31
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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In this paper we analyze the effects of nancial constraints on the exchange rate through the portfolio balance channel. Our contribution is twofold: First, we construct a tractable two-period general equilibrium model in which financial constraints inhi