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European Economic Review

C. Cantore, E. Leonardi, Alice Albonico et al. · 0 citations
Open access Sep 2026

A Model of Macroeconomic Policies with Endogenously Insurable Exchange Rates

We propose a tractable small-open-economy model in which uncovered interest parity premia on foreign exchange (FX) markets arise from the endogenous lack of insurability of exchange rate risks. Asymmetric information about monetary policy can make the tails of the exchange rate distribution uninsurable in FX hedging ma...

S. Basu, Pablo Winant · 0 citations

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