Bhattacharya, Sudipto; Detragiache, Enrica - In: Scandinavian Journal of Economics 96 (1994) 4, pp. 515-29
Creditor country governments have an interest in avoiding defaults by sovereign debtors because default sanctions may be costly to their citizens. As a result, a standard bargaining model predicts that debtors do not repay in equilibrium, even if the threat of sanctions is credible on the part...