We assess the quantitative relevance of expectations-driven sovereign debt crises, focusing on the Southern European crisis of the early 2010s and the Argentine default of 2001. The source of multiplicity is the one in Calvo (1988). Key for multiplicity is an output process featuring long...

We develop a sovereign default model with debt renegotiation in which interest-rate shocks affect default incentives through two mechanisms. The first is the standard mechanism through which higher rates tighten the budget constraint. The second rests on how risk-free rates affect lenders'...

China and the eurozone are alike in terms of unbalanced regional growth and having a common currency. Inland China, with growth much slower than that of coastal China, calls for a weak currency. However, RMB, the common currency for all of China, cannot depreciate to match inland China’s weak...