dynamics of a country's growth, consumption, and sovereign debt, assuming that the government's objective is to maximize short …-term, typically wasteful, expenditures. Sovereign debt can extend the government's effective horizon; the government's ability to … that saves little, the government may engage in repressive policies to enhance its debt capacity, which only ensures that …

liquidity. Asset shocks impair a bank’s ability to roll over debt because of agency problems associated with high leverage. In …