This paper proposes a quantitative theory of the interaction between private and public debt in an open economy …. Excessive private debt increases the frequency of financial crises. During such crises the government provides fiscal bailouts … financed with risky public debt. This response may cause a sovereign debt crisis, which is characterized by a higher …

We develop a dynamic recursive model where political and economic decisions interact, to study how excessive debt … cooperate (or not) - on the allocation of fiscal budgets (including rents) and issuance of sovereign debt. A classic commons … problem triggers collective fiscal impatience and excessive debt issuing, leading to a vicious circle of high borrowing costs …

rate policy, will destabilize the economy if the feedback from debt surprises back to the primary surplus is too weak. This … design of fiscal and monetary policy in emerging markets where sovereign credibility is not well established. Recent debt …

public debts in order to keep internal support. To be effective, this strategy requires the share of foreign debt to be … than a third of all sovereign debt crises in the 1970-2001 period are connected to an international sanction episode. To … narrow, debt repudiation releases resources for public spending, invalidating chances of overthrow. Lastly, we report …