منابع مشابه
Inflation, default, and the denomination of sovereign debt
Emerging market countries increasingly issue nominal government debt. At the same time, these countries experience sovereign debt crises with default and high inflation. This paper studies the implications of debt denomination for sovereign default and inflation policies. Using bond-level data on government borrowing, I show that default and inflation rates vary systematically with debt denomin...
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This paper analyses whether sovereign default episodes can be seen as contingencies of optimal international lending contracts. The model considers a small open economy with capital accumulation and without commitment to repay debt. Taking first order approximations of Bellman equations, I derive analytical expressions for the equilibrium level of debt and the optimal debt contract. In this env...
متن کاملDefault and efficient debt markets
We examine the nature of debt contracts when repayment of debt cannot be fully enforced. We study outcomes an infinite-horizon economy in which some individuals have access to a productive, intertemporal technology. Individuals without access to the technology must lend their savings to the rest. Borrowers can default on their debt at any time: lenders can capture a fraction of their investment...
متن کاملFinancial Intermediation and Government Debt Default
Recent empirical evidence suggests that the major cost of sovereign default lies in its effects on the domestic financial system, rather than any external sanctions. To explore this link, we extend the banking model of Gertler and Karadi (2011) to allow banks to hold risky long-term government debt, and then incorporate bank runs following Gertler and Kiyotaki (2013). Banks face an agency probl...
متن کاملSovereign Debt Renegotiation and Credit Default Swaps
A credit default swap (CDS) contract provides insurance against default. After a country defaults, the country and its lenders usually negotiate over the share of the defaulted debt to be repaid. This paper incorporates CDS contracts into a sovereign default model and demonstrates that the existence of a CDS market results in lower default probability, higher debt levels, and lower nancing cost...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2018
ISSN: 1556-5068
DOI: 10.2139/ssrn.3259649