Schuknecht, Ludger (contributor); … - 2008
with a positive probability of 1-P(x
t
), 0 d P(x
t
) d1. Here,
13
ECB
Working Paper Series No 879
March 2008
x
t … expected repayment in the case of
default, (1- 2
t
/(1+r
t
)), it increases with the probability of default, (1-P(x
t … the central
governments of the benchmark countries as witnessed by negative values on the x-axis.
Another noteworthy …