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How does physical capital accumulation affect the decision to default in developing small open economies? We find that, conditional on a level of foreign indebtedness, more capital improves the sovereign's ability to meet its obligations, reducing the likelihood of default and the risk premium....
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What is the optimal consumer bankruptcy law? I examine this question in the context of an incomplete markets lifecycle … model with a planner who can choose state-contingent bankruptcy costs. I develop two key theoretical characterizations … filing. Second, it is optimal for the planner to always allow bankruptcy if the household cannot repay or would prefer an …
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How does physical capital accumulation affect the decision to default in developing small open economies? We find that, conditional on a level of foreign indebtedness, more capital improves the sovereign?s ability to meet its obligations, reducing the likelihood of default and the risk premium....
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state-contingent policies. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 in particular generates a …
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