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Sovereign borrowing, financial assistance and debt repudiation

Kirsch, Florian; Rühmkorf, Ronald - 2013

Official lenders provide financial assistance to countries that face sovereign debt crisis. The availability of financial assistance has counteracting effects on the default incentives of governments. On the one hand, financial assistance can help to avoid defaults by bridging times of...

Persistent link: https://www.econbiz.de/10009748733

Sovereign borrowing, financial assistance, and debt repudiation

Kirsch, Florian; Rühmkorf, Ronald - In: Economic theory : official journal of the Society for … 64 (2017) 4, pp. 777-804

Persistent link: https://www.econbiz.de/10011946058

The bright side of the doom loop : banks' sovereign exposure and default incentives

Rojas, Luis E.; Thaler, Dominik - 2023

prominent policy prescriptions - lower exposure of banks to domestic sovereign debt or a commitment not to bailout banks - can …

Persistent link: https://www.econbiz.de/10014482907

Welfare gains of bailouts in a sovereign default model

Pancrazi, Roberto; Seoane, Hernán D.; Vukotic, Marija - 2019

open economy requests a bailout from an international financial institution, it receives a non-defaultable loan of size G … that comes with imposed debt limits. The government endogenously asks for the bailout during recessions and repays it when … the economy recovers. Hence, the bailout acts as an imperfect state contingent asset that makes the economy better off …

Persistent link: https://www.econbiz.de/10012160653

Sovereign Bailouts and the Welfare Effects of Seniority

Senel, Gonca - 2018

This paper explores the welfare effects of the seniority requirement of the international lender of the last resort (ILLR). An ILLR with seniority decreases the interest burden of the country because ILLR accepts a lower interest rate due to the higher chance of getting repaid. On the other...

Persistent link: https://www.econbiz.de/10012937128

Domestic and external sovereign debt

Di Casola, Paola; Sichlimiris, Spyridon - 2017

Why do countries tend to repay their domestic and external debt, even though the legal enforcement of the sovereign debt contract is limited? Contrary to conventional wisdom, we argue that temporary market exclusion after default is costly. When the domestic financial market is characterized by...

Persistent link: https://www.econbiz.de/10011747831

Sovereign debt puzzles

Bolton, Patrick; Gulati, Mitu; Panizza, Ugo - 2022 - Draft Date: December 5, 2022

We review the state of the sovereign debt literature and point out that the canonical model of sovereign debt cannot be easily reconciled with several facts about sovereign debt pricing and servicing. We identify and classify twenty puzzles. Some are well known and documented, others are less so...

Persistent link: https://www.econbiz.de/10013536301

Model-Based Estimation of Sovereign Default

Gumus, Inci - 2018

We estimate a canonical sovereign default model from Arellano (2008) for Argentina via maximum simulated likelihood estimation to understand how well it performs in terms of predicting default events. The estimated model accounts for the overall default patterns of Argentina and closely matches...

Persistent link: https://www.econbiz.de/10012932435

News, sovereign debt maturity, and default risk

Dvorkin, Maximiliano A.; Sanchez, Juan M.; Sapriza, Horacio - 2018

Leading into a debt crisis, interest rate spreads on sovereign debt rise before the economy experiences a decline in productivity, suggesting that news about future economic developments may play an important role in these episodes. In a VAR estimation, a news shock has a larger contemporaneous...

Persistent link: https://www.econbiz.de/10011950496

Domestic and foreign sovereign debt stability

Torres, Leonardo Barros; Paczos, Wojtek; Shakhnov, Kirill - 2024

We present a theory of determinants of sovereign debt stability on foreign and domestic markets. Besides the two traditional factors - debt size and output contractions, we highlight the role of the third factor: distortionary tax, which hinders the government’s ability to freely raise...

Persistent link: https://www.econbiz.de/10014491753