We document that creditor losses ("haircuts") during sovereign debt restructurings vary across debt maturity. In our novel dataset on instrument-specific haircuts suffered by private creditors in 1999-2020 we find larger losses on short- than long-term debt, independently of the specific haircut...

We extend "economic equivalence" results, like the Ricardian equivalence proposition, to the political sphere where policy is chosen sequentially. We derive conditions under which a policy regime (summarizing admissible policy choices in every period) and a state are "politico-economically...

We develop a sovereign debt model with offcial and private creditors where default risk depends on both the level and the composition of liabilities. Higher exposure to offcial lenders improves incentives to repay but carries extra costs, such as reduced ex-post flexibility. The model implies...

We shed light on the function, properties and optimal size of austerity using the standard sovereign debt model augmented to include incomplete information about credit risk. Austerity is defined as the shortfall of consumption from the level desired by a country and supported by its repayment...

Nach Ansicht von Ludger Schuknecht, ehem. OECD und Bundesministerium der Finanzen, sollte mit dem absehbaren Ende der Covid-19-Krise die Schuldenbremse wieder angewendet werden. Sie garantiere, dass Deutschland seinen zukünftigen Herausforderungen gewachsen ist. Zudem sei sie pro-europäisch,...

We extend economic equivalence results, like the Ricardian equivalence proposition, to the political sphere where policy is chosen sequentially. We derive conditions under which a policy regime (summarizing admissible policy choices in every period) and a state are politico-economically...

We extend "economic equivalence" results, like the Ricardian equivalence proposition, to the political sphere where policy is chosen sequentially. We derive conditions under which a policy regime (summarizing admissible policy choices in every period) and a state are "politico-economically...

We develop a sovereign debt model with official and private creditors where default risk depends on both the level and the composition of liabilities. Higher exposure to official lenders improves incentives to repay but carries extra costs, such as reduced ex-post flexibility. The model implies...