The macrodynamics of financial fragility within a hard peg arrangement

► We presents an open-economy macrodynamical growth model to study the financial fragility. ► We deal with an endogenous process of debt accumulation under a currency-board arrangement. ► A nonlinear real-financial interaction determines the overborrowing process. ► We estimate in continuous time such a nonlinear model. ► We study the stability properties of the multiple equilibria.