Hedging Alternatives for the Mortgage Stabilization Fund (FRECH): European Cap Options for the Real Interest Rate

Borradores de Economia
Number: 
265
Published: 
Classification JEL: 
G23, C23
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy

The World Bank has proposed an alternative hedging instrument to be offered by the FRECH, instead of the collar-swap currently available. The suggested derivative corresponds to a European Cap option for the real interest rate, which could give greater fl