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 …

This paper empirically investigates the extent of investor moral hazard associated with IMF bailouts by analyzing the … responses of sovereign bond spreads to the changes in the perceived probability of IMF bailouts of countries undergoing … financial crisis. We do not find strong evidence that the extent of investor moral hazard changed after the non-bailout of …