Di Gioacchino, Debora; Ginebri, Sergio; Sabani, Laura - Dipartimento di Economia, Gestione, Società e … - 2003
We develop a two period model to investigate what makes the promise to repay public debt credible. We explor a political solution excluding any role for long-run reputational arguments. There are two sources of heterogeneity among individuals: wealth and income. Differences in asset holdings...