. Similarly, although firms with higher cash reserves are less likely to default over short horizons, endogenously determined … liquidity may be related positively to the longer-term probability of default. Our empirical analysis confirms these predictions …

We develop a sovereign debt model with official and private creditors where default risk depends on both the level and … presence of long-term debt overhang, the availability of official funds increases the probability of default on existing debt …, although default does not trigger exclusion from private credit markets. These findings help shed light on joint default and …

shortage sell loans on the interbank market. Two equilibria emerge. In the no default equilibrium, all banks hold enough … reserves and remain solvent. In the mixed equilibrium, some banks default with positive probability. The former exists when …

Sovereign yield spreads within currency unions may reflect the risk of outright default. Yet, if exit from the currency … country of a currency union, allowing both for default within and exit from the union. Initially, the government runs … point, giving rise to default and currency risk. Second, the macroeconomic implications of both sources of risk differ …

-specific fiscal shocks. Differences in the cyclicality of fiscal revenues affect the option value of borrowing and resulting default …

favorable loan package; that it is associated with over-investment even when investment does not create collateral; and that low …