earnings realization or a bad type. Default adversely affects an agent's credit score and endogenously limits the household …

chooses to repay when the penalty for default is permanent future exclusion from financial markets. Dollarization implies the … default find themselves in a more uncomfortable situation. Thus dollarization reduces a government's incentives to default …

the gains from default induced redistribution against the cost of defaulting. Ex ante, the government issues debt of …

This paper builds a dynamic model of borrowing and default to study the term structure of sovereign bonds in emerging … markets. The borrower in the model can buy short and long bonds at contingent prices that reflect the timing of default events …. The model generates a yield curve that is upward sloping on tranquil times as in the data. The reason is that if default …

limited enforcement of trades. We then show that -- when collateral is sufficient to avoid default -- profit-maximizing CCPs … default exposure, user-oriented CCPs avoid default, but allow for less trade, while profit-maximizing CCPs yield a higher … volume of trade despite allowing for some default. In such a situation, profit-maximzing CCPs can be efficient, provided …

In this paper we present circumstances under which the possibility of high leverage can lead to widespread default and … national crises. In models with incomplete markets, default and production, there will almost always be a mismatch between firm … output across states of nature and asset promises. Default mechanisms are crucial institutions in allowing trade to go …

equilibrium model with endogenous default to a typical emerging market economy and evaluates whether the existence of a (partially …, and the likelihood of default …