anticipate that the country has an incentive to default after a liquidity shock. Indeed, in the event of such a shock, we show … world with liquidity crises and strategic default, we model a contracting game between international lenders and a country … reserves if the probability of liquidity shocks is high enough; however the cost of debt increases in reserves when the lenders …

the country has an incentive to default after a liquidity shock. Indeed, we show that the country may choose to retain … world with liquidity crises and strategic default, we model a contracting game between international lenders and a country … probability of liquidity shocks is high enough; however the cost of debt increases in reserves when the lenders anticipate that …

credit markets, liquidity demands rise in a country's domestic banking sector, which raise the probability of bank runs and …

liquidity reserves necessary to finance short-term debt services. As a result, the concept of a solvent, illiquid sovereign … debtor has generated significant literature on debt crises' links with currency and liquidity crises. In this chapter, I … consider the two major forces interacting with liquidity and debt crises: the role of self-fulfilling expectations, plus inter …

environment; ii) the role of government bonds as liquidity instruments; iii) whether and how the correlation structure of the … sovereign-bonds’ market values affects the portfolio composition of liquidity instruments and prices, and the scope for a debt …

simple open economy model where increased foreign exchange reserves reduce the costs of liquidity risk. Given the amount of …

to smooth consumption over time and because they provide collateral and liquidity services. We characterize a recursive … and contemporaneous costs due to lost collateral and liquidity are essential to generate these empirically plausible …