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This paper studies whether IMF programs and their size affect borrowing costs by comparing the coupon of bonds issued … around an IMF arrangement. By comparing bonds issued immediately before the inset of the program with bonds issued …
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The price of a safe asset reflects not only the expected discounted future cash flows but also future service flows, since retrading allows partial insurance of idiosyncratic risk in an incomplete markets setting. This lowers the issuers’ interest burden and allows the government to run a...
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