Efficient Bailouts?

I am grateful to Ufuk Akcigit, Manuel Amador, Luigi Bocola, Maya Eden, Marty Eichenbaum, the editor, Huberto Ennis, Juan C. Hatchondo, Andreas Horstein, Todd Keister, Anton Korinek, Frederic Malherbe, Enrique Mendoza, Andy Powell, Vincenzo Quadrini, Thomas Sargent, John Shea, Ali Shourideh, Carlos Vegh, Stijn Van Nieuwerburgh and three anonymous referees for helpful comments. I also thank seminar participants at 2013 AEA Meetings, Bank of Italy, Central Bank of Uruguay, Dallas Fed Conference on “Financial frictions and Monetary Policy in an Open Economy,” Di Tella “XIV Workshop in International Economics and Finance,” Harvard, HKUST “International Workshop on Macroeconomics,” NYU, Stanford, Columbia, Minneapolis Fed, NBER Impulse and Propagation Mechanisms Summer Institute, NBER Fall Meetings, New York Fed, Richmond Fed, Society of Economic Dynamics (SED), Universidad de Montevideo, University of Maryland, University of Montreal, University of Pennsylvania, and World Bank for useful comments. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.

• December 4, 2012