We analyze conditions under which a candidate's campaign rhetoric may affect the beliefs of the voters over what policy the candidate will implement in case he wins the election. We develop a model of repeated elections with complete information in which candidates are purely ideological....

Conventional wisdom views the problem of sovereign risk as one of insufficient penalties. Foreign creditors can only be repaid if the government enforces foreign debts. And this will only happen if foreign creditors can effectively use the threat of imposing penalties to the country. Guided by...