01996cas a2200301 a 4500 AALejournalIMF023148 230101c9999 xx r poo 0 0eng d 20.00 USD 9798400215629 1018-5941 BD-DhAAL BD-DhAAL Biljanovska, Nina. Sudden Stops and Optimal Policy in a Two-agent Economy / Nina Biljanovska, Alexandros Vardoulakis. Washington, D.C. : International Monetary Fund, 2022. 1 online resource (54 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 We introduce heterogeneity in terms of workers and entrepreneurs in an otherwise standard Fisherian model to study Sudden Stop dynamics and optimal policy. We show that the distinction between workers and entrepreneurs introduces a distributive externality that is absent from the representative-agent setup. While in tranquil times redistribution is driven by the relative marginal utilities of consumption, the planner additionally favors entrepreneurs during Sudden Stops to mitigate Fisherian deation. Although agentheterogeneity does not add much in explaining the Sudden Stop phenomena, it adds to the understanding of how policies can best be designed to alleviate the negative effects of Sudden Stops. Mode of access: Internet Financial Markets and the Macroeconomy imf General Financial Markets imf Macroeconomics imf Sudden Stops imf Vardoulakis, Alexandros. IMF Working Papers; Working Paper ; No. 2022/147 Full text available on IMF https://elibrary.imf.org/openurl?genre=journal&issn=1018-5941&volume=2022&issue=147 IMF e-Library