An undistorted free market economy endowed with perfectly rational and informed agents overborrows, i.e., borrows beyond the efficient level, because of the agents' failure to internalize credit rationing resulting from sovereign risk. It follows that the elimination of the market overborrowing...

An undistorted free market economy endowed with perfectly rational and informed agents overborrows, i. e. , borrows beyond the efficient level, because of the agents` failure to internalize credit rationing resulting from sovereign risk. It follows that the elimination of the market...