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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

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 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

Optimal Sovereign Debt Write-Downs

Ghosal, Sayantan; Thampanishvong, Kannika - 2007

At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals...

Persistent link: https://www.econbiz.de/10014049848

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

Incentive-Compatible Sovereign Debt

Bersem, Mario R.C. - 2013

This paper presents a theory of sovereign borrowing and lending when there is no court to enforce repayment obligations. Specifically, I extend the costly state verification approach in financial contracting to include an ex-post repayment decision in which the borrower repays creditors to avoid...

Persistent link: https://www.econbiz.de/10013090355

Honoring Sovereign Debt or Bailing Out Domestic Residents : A Theory of Internal Costs of Default

Mengus, Eric - 2014

the sovereign optimizes over its debt, default and bailout policies. It derives conditions under which internal bailouts …

Persistent link: https://www.econbiz.de/10013056285

A Dynamic Model of Sovereign Debt and Defaults : Understanding the Incentives of the Borrower

Giraldo, Marcela - 2014

This paper develops a non-stochastic sovereign-debt dynamic model, with increasing cost of capital. It finds that there are parameters for which there is a stable fixed borrowing level, and there are parameters for which the model depicts the case of serial defaulters. Levels of debt that tend...

Persistent link: https://www.econbiz.de/10013063372

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