In this paper we examine whether variation in investors’ demand for risky assets is associated with recoveries on defaulted debt securities. Our examination is motivated by the prediction of standard portfolio separation theorems that an increase in aggregate investor risk aversion is associated with a decrease in the demand for the market portfolio of risky assets. Motivated by this prediction...

This study aims to investigate the effect of the Twin Deficits, i.e., deficit of government budget, and deficit in current account, on the foreign debt in Jordan during the period 1977 – 2004. A four variables cointegration analysis with the variables: outstanding foreign debt, budget deficit, current account balance proxied by its index, and gross fixed capital formation were exploited. Dicky-...

This article examines the undemocratic process of telecommunications divestment in Jamaica and Trinidad and Tobago. The divestment of the telecommunications sector was largely prompted by each state’s inability to service external debt. Despite espousing the importance of public participation in the ownership of state-owned enterprises being divested, the governments each limited or excluded na...

A quantitative framework is developed to bring forward the insurance motive for holding international reserves. The insurance value of reserves is quantified as the market price of an equivalent option that provides the same insurance coverage as the reserves. This quantitative framework is applied to calculating the cost of a regional insurance arrangement (e.g. an Asian Monetary Fund) and to ...

Default on sovereign debt is a form of political risk. Issuers and creditors have responded to this risk both by strengthening the terms in sovereign debt contracts that enable creditors to enforce their debts judicially and by creating terms that enable sovereigns to restructure their debts. These apparently contradictory approaches reflect attempts to solve an incomplete contracting problem i...

Poverty can be defined as the inability to achieve a certain minimal standard of living. With the severe economic shocks that rocked the Nigerian economy during the early 1980s came real and perceived increases in the level of poverty in the country. Among the factors contributing to the shocks were declining prices of oil, the country's main export, and rises in real international interest rat...

This paper explores the impact of nationally held public debt and foreign debt on the US economy. It has tried to define the nationally held public debt as an additional asset for the private sector by insuring a source of future saving, an increase in investment capacity and a source of increase in demand. A linear regression analysis of 39 observations from 1970 to 2014, using different lengt...

The current financial and economic crisis is the worst since the stock-market crash of 1929. As with every complex phenomenon, a mixture of causes have been put forward: the housing-market bubble, risky mortgage loans, ‘toxic’ financial products, high personal and corporate debts, inaccurate credit ratings, and much more. The shockwaves have spread so rapidly and hit so hard that entire banking...

We propose a model for the correlation structure of reference portfolios of collateralized debt obligations. The model is capable of exhibiting typical characteristics of the implied correlation smile (skew, respectively) observed in the market. Moreover, it features a simple economic interpretation and is computationally inexpensive as it naturally integrates into the factor model framework.