Foreign debt, distribution, inflation and growth in a SFC model

PABLO GABRIEL BORTZ

Munster

Workshop; Workshop ?Non-standard Monetary Approaches in Macroeconomics; 2012

Centrum für Angewandte Wirtschaftsforschung, Westfälische Wilhelms-Universität, Münster

We present an open economy growth model, using the Stock-Flow Consistent (SFC) methodology. Our contribution is to add the possibility of one country issuing debt denominated in the other country?s currency, as well as allowing its firms to borrow from foreign banks. We investigate the effects and interactions that these features have on trade and financial flows, income distribution, foreign debt, fiscal and monetary policy, and try to draw some policy conclusions feasible for current economic problems such as the imbalances in the Eurozone.