01902cas a2200265 a 4500 AALejournalIMF003428 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451860634 1018-5941 BD-DhAAL BD-DhAAL Justiniano Espigares, Alejandro. An Estimated Small Open Economy Model of the Financial Accelerator / Alejandro Justiniano Espigares, Selim Elekdag, Ivan Tchakarov. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (27 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper develops a small open economy model where entrepreneurs partially finance investment using foreign currency denominated debt subject to a risk premium above and beyond international interest rates. We use Bayesian estimation techniques to evaluate the importance of balance sheet vulnerabilities combined with the presence of the financial accelerator for emerging market countries. Using Korean data, we obtain an estimate for the external risk premium, indicating the importance of the financial accelerator and potential balance sheet vulnerabilities for macroeconomic fluctuations. Furthermore, our estimates of the Taylor rule imply a strong preference to smooth both exchange rate and interest rate fluctuations. Mode of access: Internet Elekdag, Selim. Tchakarov, Ivan. IMF Working Papers; Working Paper ; No. 2005/044 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/044/001.2005.issue-044-en.xml IMF e-Library