The accumulation of large amount of sovereign reserves has fuelled an intense debate on the associated costs. In a world with liquidity crises and strategic default, we model a contracting game between international lenders and a country, which delivers the country's optimal portfolio choice and...

The accumulation of large amount of sovereign reserves has fuelled an intense debate on the associated costs. In a world with liquidity crises and strategic default, we model a contracting game between international lenders and a country, which delivers the country's optimal portfolio choice and...

The COVID-19 pandemic causes sharp reductions in economic output and sharp increases in government expenditures. This increases the riskiness of sovereign debts, especially in emerging economies. We propose a framework to study debt sustainability. The economy is subject to productivity and...