Equilibrium sovereign default with endogenous exchange rate depreciation

Sovereign default is often associated with disturbances in a country’s trade relations. Often the defaulter’s currency depreciates while trade volume falls drastically. This paper develops a model to incorporate real depreciation along with sovereign bankruptcy. The exchange rate is determined in equilibrium as the relative price of imports. We demonstrate that a default episode can imply up to a 30% real depreciation. This matches the depreciations observed in crisis events for developing countries. We argue that much of the exchange rate movement is explained by market clearing adjustments to trade disruptions in the aftermath of default

Equilibrium sovereign default with endogenous exchange rate depreciation

Sovereign default is often associated with disturbances in a country’s trade relations. Often the defaulter’s currency depreciates while trade volume falls drastically. This paper develops a model to incorporate real depreciation along with sovereign bankruptcy. The exchange rate is determined in equilibrium as the relative price of imports. We demonstrate that a default episode can imply up to a 30% real depreciation. This matches the depreciations observed in crisis events for developing countries. We argue that much of the exchange rate movement is explained by market clearing adjustments to trade disruptions in the aftermath of default

Equilibrium sovereign default with endogenous exchange rate depreciation

Sovereign default is often associated with disturbances in a country’s trade relations. Often the defaulter’s currency depreciates while trade volume falls drastically. This paper develops a model to incorporate real depreciation along with sovereign bankruptcy. The exchange rate is determined in equilibrium as the relative price of imports. We demonstrate that a default episode can imply up to a 30% real depreciation. This matches the depreciations observed in crisis events for developing countries. We argue that much of the exchange rate movement is explained by market clearing adjustments to trade disruptions in the aftermath of default.Endogenous default, endogenous exchange rate, trade balance.

SK2 channels regulate mitochondrial respiration and mitochondrial Ca2+ uptake

Mitochondrial calcium ([Ca(2+)]m) overload and changes in mitochondrial metabolism are key players in neuronal death. Small conductance calcium-activated potassium (SK) channels provide protection in different paradigms of neuronal cell death. Recently, SK channels were identified at the inner mitochondrial membrane, however, their particular role in the observed neuroprotection remains unclear. Here, we show a potential neuroprotective mechanism that involves attenuation of [Ca(2+)]m uptake upon SK channel activation as detected by time lapse mitochondrial Ca(2+) measurements with the Ca(2+)-binding mitochondria-targeted aequorin and FRET-based [Ca(2+)]m probes. High-resolution respirometry revealed a reduction in mitochondrial respiration and complex I activity upon pharmacological activation and overexpression of mitochondrial SK2 channels resulting in reduced mitochondrial ROS formation. Overexpression of mitochondria-targeted SK2 channels enhanced mitochondrial resilience against neuronal death, and this effect was inhibited by overexpression of a mitochondria-targeted dominant-negative SK2 channel. These findings suggest that SK channels provide neuroprotection by reducing [Ca(2+)]m uptake and mitochondrial respiration in conditions, where sustained mitochondrial damage determines progressive neuronal death.Cell Death and Differentiation advance online publication, 10 March 2017; doi:10.1038/cdd.2017.2