Gonçalves, Carlos Eduardo; Guimaraes, Bernardo - Departamento de Economia, Faculdade de Economia, … - 2012
This paper studies the incentives for fiscal adjustment for a debtor government under the risk of defaulting on its external debt. An externality arises from the bargaining process that follows default: higher tax revenues levied by the debtor lead to higher repayment to the creditor, and thus...
