Financial crises, debt volatility and optimal taxes

Parra-Polanía, Julián Andrés; Vargas-Riaño, Carmiña Ofelia

Financial crises, debt volatility and optimal taxes

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Borradores de Economía; No. 839

Date published

2014-08-13

Date

2014-08-13

Authors

Parra-Polanía, Julián Andrés
Vargas-Riaño, Carmiña Ofelia

Document language

spa

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Las opiniones contenidas en el presente documento son responsabilidad exclusiva de los autores y no comprometen al Banco de la República ni a su Junta Directiva.

The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors.

Abstract

We study financial crises in a small open production economy subject to credit constraint and uncertainty on the value of debt repayments. We find that the possibility of reducing the severity of future crises encourages the central planner (CP) to increa