@article {16258,
	title = {Defaultable Debt, Interest Rates and the Current Account},
	journal = {Journal of International Economics},
	volume = {69},
	number = {1},
	year = {2006},
	note = {Matlab code for programs attached.},
	pages = {64-83},
	abstract = {World capital markets have experienced large scale sovereign defaults on a number of occasions. In this paper we develop a quantitative model of debt and default in a small open\&nbsp;economy. We use this model to match four empirical regularities regarding emerging markets:\&nbsp;defaults occur in equilibrium, interest rates are countercyclical, net exports are countercyclical,\&nbsp;and interest rates and the current account are positively correlated. We highlight the role of the\&nbsp;stochastic trend in emerging markets, in an otherwise standard model with endogenous default,\&nbsp;to match these facts.},
	url = {http://dx.doi.org/10.1016/j.jinteco.2005.05.005},
	author = {Mark Aguiar and Gita Gopinath}
}
