Broner, Fernando; Lorenzoni, Guido; Schmuckler, Sergio - Society for Economic Dynamics - SED - 2006
We argue that emerging economies borrow short term due to the high risk premium charged by bondholders on long-term debt. First, we present a model where the debt maturity structure is the outcome of a risk sharing problem between the government and bondholders. By issuing long-term debt, the...