to cover all of the major problems a country can experience while trying to issue new debt, including default, sharp … factors and observed global factors. Our findings motivate quantitative models of debt and default with the following features …/borrowing decision, (iv) multiperiod debt, (v) a default penalty that includes both a reputation loss and a physical output loss, and (vi …

default regardless of its consequences for future generations. An old generation with little concern for its country''s access … to capital markets can force a default on debt if it has the majority of voters. On the other hand, if the younger …