01695cas a2200241 a 4500 AALejournalIMF008492 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451858891 1018-5941 BD-DhAAL BD-DhAAL Jeanne, Olivier. Why Do Emerging Economies Borrow in Foreign Currency? / Olivier Jeanne. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (38 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 explores the hypothesis that the dollarization of liabilities in emerging market economies is the result of a lack of monetary credibility. I present a model in which firms choose the currency composition of their debts so as to minimize their probability of default. Decreasing monetary credibility can induce firms to dollarize their liabilities, even though this makes them vulnerable to a depreciation of the domestic currency. The channel is different from the channel studied in the earlier literature on sovereign debt, and it applies to both private and public debt. The paper presents some empirical evidence and discusses policy implications. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2003/177 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/177/001.2003.issue-177-en.xml IMF e-Library